Global bond markets steadied on Wednesday following a heavy sell-off sparked by the Bank of Japan’s surprise decision to relax its policy of pinning yields close to zero.

US 10-year Treasury yields edged 0.01 percentage points higher to 3.69 per cent, having earlier touched a three-week high of 3.71 per cent. German and UK bond yields were also marginally higher, adding to Tuesday’s sharp rise.

Bond markets had been rocked by the BoJ’s announcement that it would allow 10-year Japanese yields to climb as high as 0.5 per cent, compared with 0.25 per cent previously. While governor Haruhiko Kuroda stressed that the move was not a shift away from Japan’s ultra-loose monetary policy, investors sensed a crack in the BoJ’s resolve to stand apart from the global dash to higher interest rates.