Photographer: Ben Brewer\/Bloomberg <\/p>\n
(Bloomberg) — Treasury Secretary Scott Bessent said he had spoken with his Japanese counterpart amid a selloff in Japan\u2019s government bonds that he said had fed through to affect the Treasuries market.<\/p>\n
\u201cI\u2019ve been in touch with my economic counterpart in Japan, and I am sure that they will begin saying the things that will calm the market down,\u201d Bessent said in a Fox News interview from Davos, Switzerland, where he was attending the annual World Economic Forum.<\/p>\n
Most Read from Bloomberg<\/p>\n
Tuesday\u2019s trading session in Tokyo saw what dealers said was the most chaotic session in recent memory. Yields on Japan\u2019s 30- and 40-year bonds both jumped by more than 25 basis points, the biggest move since US President Donald Trump\u2019s Liberation Day tariffs rattled global markets last year.<\/p>\n
WATCH: For 30 years, Japan\u2019s prices were largely at a standstill. Now a weak yen has changed everything. Here\u2019s how consumers and businesses are coping with rising costs, and what it means for the future.Source: Bloomberg <\/p>\n
Ten-year Treasury yields were up about 6 basis points as of 2:24 p.m. in New York, at 4.28%. Earlier in the session, they hit their highest level since August.<\/p>\n
Japanese Finance Minister Satsuki Katayama, also attending the meetings in Davos, separately called on market participants to calm down after the intense selloff. Bessent, who had a decades-long career as a hedge fund manager, said the Japanese market saw a \u201csix standard deviation\u201d move over the past two days. The equivalent in the US would see 10-year yields surge 50 basis points, he said.<\/p>\n
\u2018False Narrative\u2019<\/p>\n
\u201cIt\u2019s very difficult to disaggregate the market reaction from what\u2019s going on endogenously in Japan,\u201d Bessent said. \u201cJapanese rates are up a tremendous amount.\u201d<\/p>\n
The Japanese bond slide was underway before news about Greenland, Bessent said \u2014 playing down any impact from concerns about Trump\u2019s moves to threaten European nations with tariff hikes over their opposition to his attempt to control the semi-autonomous Danish territory.<\/p>\n
Asked earlier about reports on the idea of Europe possibly selling US Treasuries as a potential countermeasure to Trump\u2019s Greenland initiative, Bessent dismissed that speculation as a \u201cfalse narrative.\u201d He said that \u201cthere is no talk in European governments\u201d of such a measure and that media had \u201clatched on\u201d to a Deutsche Bank report.<\/p>\n
\u201cIt defies any logic and I could not disagree more strongly on that,\u201d Bessent said at a press conference.<\/p>\n
European Voices<\/p>\n
Deutsche Bank strategist George Saravelos wrote in a weekend note that Europe amounts to being \u201cAmerica\u2019s largest lender,\u201d and that the US reliance on foreign nations for capital is its \u201ckey weakness.\u201d Given the high inter-dependence of European and US financial markets, \u201cit is a weaponization of capital rather than trade flows that would by far be the most disruptive to markets,\u201d Saravelos wrote.<\/p>\n
For its part, the Danish pension fund AkademikerPension said Tuesday it\u2019s planning to exit US Treasuries by the end of the month. Michael Krautzberger, a senior executive at Germany\u2019s Allianz Global Investors, said fueling market volatility could help put pressure on Trump. But UBS Group AG Chief Executive Officer Sergio Ermotti said it would be a \u201cdangerous bet\u201d for Europeans to attempt to weaponize their holdings of Treasuries.<\/p>\n
Bessent likened the uproar over Greenland to the \u201chysteria\u201d that followed the Liberation Day tariff announcement. In his press conference, he said, \u201cI am confident that the leaders will not escalate, and that this will work out in a manner that ends up in a very good place.\u201d<\/p>\n
He then said on Fox Business that his message now is the same as last April: \u201cSit back, take a deep breath. Do not retaliate. Do not retaliate.\u201d<\/p>\n
–With assistance from Vivianne Rodrigues.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
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