Tradeweb Government Bond Update – January 2026

Global government debt markets saw mixed moves in January. While most European 10-year benchmark yields retreated from December's high levels, their equivalents in Australia, Canada, Ireland, Japan, the UK, and the U.S. all rose during the month.

Japan's 10-year government bond yield registered the sharpest increase, climbing nearly 17 basis points over the month to close at 2.24%, after reaching a 3-year high of 2.38% on January 20. At its first 2026 meeting, the Bank of Japan kept its key policy rate steady at 0.75% ahead of snap elections planned for February 8. The central bank has continued to scale back its bond purchase program to normalize its monetary policy.

Taichi Shibuya, Head of Japan at Tradeweb, said: "The upward shift in Japanese government bond yields continued in January. In addition to general inflation and rate pressures, the major market mover in the coming weeks will be the results of the snap elections and any changes in fiscal policy that result. This type of volatility is highly uncharacteristic in Japanese government bonds, which have historically been a source of stability in global debt markets. The events of the next few weeks will be important to watch for their implications on future monetary policy."

In the U.S., the 10-year Treasury yield was another big mover, rising nearly 10.6 basis points to close the month at 4.26%. The Federal Reserve left the federal funds rate in a range of 3.50-3.75% at its January meeting, following the third of three cuts in 2025 on December 30. In its statement, the central bank said that indicators suggest overall economic activity is expanding at a "solid pace" but that "inflation remains somewhat elevated." The latest CPI data released in mid-January came in around expected levels in both the headline reading (2.7%) and core reading (2.6%) but still above the Fed's 2.0% target.

Across the Atlantic, UK 10-year Gilt yields rose for the third consecutive month, ending January 4.6 basis points higher at 4.52%. Headline UK inflation rose by more than expected to 3.4% in December, according to data from the Office for National Statistics, which was anticipated by the Bank of England in its recent forecast. The S&P Global Flash UK PMI suggested the strongest increase in private sector business activity since April 2024.

Elsewhere in Europe, most 10-year government bond yields fell in January, with those for Germany dropping by nearly five basis points to 2.80%. The yield on Italy's 10-year government bond fell by over eight basis points to 3.46%, while its French equivalent decreased by 12.7 basis points at 3.43%. The only exception was the Irish 10-year bond yield, which finished the month nearly one basis point higher at 3.11%.

Headline Eurozone inflation slowed to 2.0% in December, data from Eurostat showed, matching the European Central Bank's target. Core and services inflation measures also eased. The HCOB Eurozone Composite PMI from S&P Global showed continued expansion in December; flash PMI for the Eurozone suggested a continued rise in output in January. Meanwhile, the euro saw big increases in January, rising to its highest level since June 2021.

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