Former UK Prime Minister Liz Truss said in an interview that the surge in global bond yields reflects a mix of unchecked government borrowing and currency debasement, with the UK standing out as one of the most vulnerable cases. She said UK 10-year gilt yields have moved above 5.2%, while 30-year yields are nearing 6%, and argued that conditions may have worsened to the point where emergency spending cuts become necessary.
Truss links higher yields to debt and currency debasement
Truss described the jump in global bond yields not as a short-term fluctuation but as the result of large debt burdens combined with weaker currencies. She said, “The sharp rise in global bond yields is because of piles of debt, and Britain is one of the worst examples. The Bank of England printed money and debased the currency.”
The report says UK 10-year gilt yields have risen above 5.2%, while 30-year yields are close to 6%, both above the 5.12% level seen when she took office in 2022.
- Higher yields raise the UK government’s borrowing costs, especially for newly issued long-dated bonds.
- The move suggests investors are demanding a larger risk premium for holding UK government debt.
- The aftereffects of the 2022 “mini-budget crisis” are still present. Truss’s large tax-cut plan that year triggered a sell-off in gilts and a drop in the pound, and the episode remains fresh in the market’s memory.
Sell-off pressure extends beyond the UK
The report says the bond sell-off is not limited to Britain. According to CoinDesk, yields in the US, Japan, France and Germany have also been climbing quickly, pointing to wider concerns over debt growth, inflation pressure and fiscal sustainability.
In the US, the benchmark 10-year Treasury yield has risen above 4.8%, fully reversing the decline seen after Treasury Secretary Scott Bessent announced a long-dated Treasury buyback plan last month. At that time, the yield briefly fell to 4.62%.
According to the report, Bessent’s plan was intended to bring yields down through direct buying in the Treasury market and reduce government financing costs. Market action, though, suggests that fiscal deficits and sticky inflation have outweighed the effect of a single policy tool.
Bitcoin and gold diverge as debasement-trade assets
When bond markets come under pressure and confidence in fiat currencies is questioned, capital often rotates into what the report calls “debasement trade” assets. This time, performance has not been uniform.
- Gold briefly climbed to about $4,700 per ounce, then pulled back to roughly $4,300, near the level seen before Bessent announced intervention.
- Bitcoin rose from around $64,000 to a high of $81,000, then pulled back to about $76,500, still far above its level before the buyback plan was announced.
The report compares the two pullbacks at about 8.5% for gold and about 5.6% for Bitcoin. It also notes that Bitcoin remains closer to its recent high than gold does. Based on those figures, investor allocation in this period of bond-market stress and currency debasement has favored Bitcoin over the traditional safe-haven asset.
Truss says forced emergency cuts may follow
Truss said the answer is to speed up economic growth through supply-side measures while holding spending down. She also said the situation may already be too severe. “The only way out while maintaining public support is to grow the economy faster through supply-side measures while keeping spending down. But I fear the situation is now so serious that we may end up facing forced emergency spending cuts.”
The report says that kind of forced tightening would not come from a voluntary policy choice, but from market pressure if yields rise to levels the government can no longer comfortably finance.
Three variables now in focus
The report says the impact on crypto markets will depend on three factors from here:
- The Federal Reserve’s Sept. 16 decision, with markets watching whether rising yields and inflation pressure change the rate outlook.
- The actual scale and staying power of the US Treasury buyback plan announced by Scott Bessent.
- The direction of flows between Bitcoin and gold if the bond sell-off continues.
The report adds that while Truss’s position may lean conservative and free-market, the structural issues she identified — unsustainable government debt and central-bank money printing that weakens currencies — sit at the center of Bitcoin’s long-running investment case.