Chinese officials believe the market for USA government bonds is becoming less attractive relative to other assets, and trade tensions with the US may provide a reason to slow or stop buying American debt, according to people familiar with the matter.
Crude oil prices hit new multi-year highs as OPEC-led production cuts and healthy demand helped to balance the market.
Bank stocks were boosted on Tuesday by rising U.S. Treasury 10-year yields.
Japanese government bonds slipped on Wednesday, with 10-year futures dropping the most since late September and yields on benchmark cash bonds hitting highest since October, after the Bank of Japan trimmed its bond buying.
A combination of factors has pushed global bond yields higher in recent weeks, with global growth and higher oil prices leading investors to speculate that the world's major central banks might withdraw from their stimulus programs sooner rather than later.
In Asia, the yen climbed for a second day as traders unwound short positions in the wake of the Bank of Japan paring back purchases of ultra-long dated bonds.
Following the market's movement, bond veteran Gross, who is portfolio manager of the Janus Henderson Global Unconstrained Bond and Total Return strategies and a member of the global macro fixed income leadership team, took to Twitter on Tuesday to say "bond bear market confirmed".
"If you look at what markets are pricing in (from the Fed), maybe they're being a little too conservative when it comes to the path of future interest rate rises, particularly when you look at what inflation could potentially start to do, given the sharp rises in commodity prices we've seen since the middle of the summer", said Michael Hewson, chief markets analyst at CMC Markets in London. The dollar, already under pressure versus the yen, slid 0.6 per cent versus a currency basket, its biggest one-day drop in a month.
West Texas Intermediate crude rose 0.8 percent to $63.45 a barrel, up about 5 percent since the year began.
The greenback was 0.65 percent higher against the loonie and up 0.47 percent against the Mexican peso.
Major government bond yields extended earlier gains after the report. USA gold futures GCv1 for February delivery settled up $5.60, or 0.4 percent, at $1,319.30 per ounce.
"Japanese bond yields have been rising and this has been reinforcing the move on the yen", Thu Lan Nguyen, a Frankfurt-based FX strategist at Commerzbank.
Platinum XPT= was up 0.9 percent at $973.60 an ounce, after hitting a almost four-month high of $973.90.
The Treasury is also due to finish off this week's series of long-term securities auctions with the sale of $12 billion worth of thirty-year bonds. The British pound fell 0.2% to $1.3515, the weakest in more than a week.
The pan-European FTSEurofirst 300 index .fteu3 rose 0.48 percent and MSCI's gauge of stocks across the globe .miwd00000pus gained 0.14 percent.
For Reuters Live Markets blog on European and United Kingdom stock markets open a news window on Reuters Eikon by pressing F9 and type in "Live Markets" in the search bar.
Ready to get started?