Six Sigma abnormal fluctuations spread globally, U.S. Treasury Secretary urgently extinguishes the fire and clarifies political rumors

The dramatic fluctuations in the Japanese bond market over the past two days have evolved into a chain reaction across the global bond markets. U.S. Treasury Secretary Yellen explicitly stated on January 21 that this is the true reason behind the market decline, rather than recent political turmoil regarding Greenland. This clarification reflects the current fragility of the global financial markets and the complex interplay between politics and economics.

Abnormalities in the Japanese Bond Market: What Does Six Standard Deviations Mean?

According to the latest reports, Japan’s 10-year government bonds experienced an abnormal fluctuation of six standard deviations over the past two days. For those unfamiliar with statistics, this number may seem abstract, but its severity should not be underestimated.

In a normal distribution, events six standard deviations away from the mean are extremely rare—occurring roughly once in billions of transactions. This indicates that the volatility in Japan’s bond market has far exceeded normal ranges, representing an extreme event. Specifically, it manifests as a sharp change in Japanese bond yields, which typically reflects significant market expectations adjustments regarding Japan’s economy or central bank policies.

Chain Reaction in the Global Bond Markets

The abnormal fluctuations in Japan’s bond market are not limited to the domestic market. Yellen pointed out that this volatility is spreading to all global bond markets.

Related reports indicate that during this period:

• German bond yields are rising
• French bond yields are rising
• U.S. Treasury yields are also rising

This global increase in bond yields reflects a decline in investors’ risk appetite. When a major economy’s bond market experiences abnormal fluctuations, investors in other countries reassess risks, leading to capital reallocation. In this process, rising bond yields often mean falling bond prices, which can trigger broader market volatility.

Clarification of the Political Background

Yellen’s emphasis on “having nothing to do with Greenland” warrants attention. According to related reports, during the recent Davos Forum, former President Trump’s comments about Greenland triggered alertness in Europe, with rumors circulating that Europe might sell U.S. Treasuries as a countermeasure.

Yellen’s clarification essentially aims to dispel concerns that political conflicts are escalating into financial warfare. She emphasized that U.S. commitments to NATO are “undoubted” and that trade agreements should continue to be honored. This is a typical “firefighting” move—attributing the market decline to objective technical events (such as fluctuations in Japan’s bond market) rather than political conflicts.

Market Impact and Future Focus

The abnormal fluctuations in Japan’s bond market and their global transmission have already affected multiple asset classes. Reports indicate that during this period, gold and silver prices hit record highs, reflecting heightened risk aversion. This risk sentiment is influenced both by escalating trade tensions and the instability in global bond markets.

For the cryptocurrency market, such global financial market volatility often has a dual impact. On one hand, risk assets may face pressure; on the other hand, if risk aversion intensifies further, assets like Bitcoin, viewed as “digital gold,” could find support.

Summary

The six-standard-deviation anomaly in Japan’s bond market is a real market event, and its global transmission has become evident. While Yellen’s clarification alleviates immediate concerns about political conflicts escalating into financial warfare, it also highlights the fragility of the current global financial markets—an abnormality in a major economy’s bond market can trigger a worldwide chain reaction. Moving forward, attention should be paid to how the Bank of Japan responds to this volatility and whether global bond markets can stabilize. Meanwhile, the complexity of political and economic games will continue to influence market expectations.