The two political parties expected to form the next German government have agreed to loosen the country's constitution restrictions on borrowing, enabling 1 trillion euros ($1.08 trillion) or more in spending on defense and infrastructure.

The prospective partners in Germany’s next government say they will seek to loosen the nation’s rules on running up debt to allow for higher defense spending

On Wednesday, 10-year German bonds saw the worst day since March 1990 — just months after the fall of the Berlin Wall.

A $1.3 trillion German spending deal and commentary from the European Central Bank has also prompted yields to surge in the U.S. and elsewhere.

Japan’s 10-year borrowing costs hit a 16-year high, as the scale of the sell-off in German bonds and the size of the potential fiscal expansion jolted sovereign debt markets accustomed to spending restraint in Germany.