Former U.K. Prime Minister Liz Truss has cautioned that the surge in government borrowing and weakening currencies is fueling a global bond selloff, with Britain standing out as one of the economies most vulnerable to the pressure.
Truss said rising bond yields are being driven by what she described as excessive levels of government debt and currency debasement. She singled out the U.K., arguing that the Bank of England’s money-printing policies have contributed to the pound’s erosion.
The increase in U.K. borrowing costs has been particularly pronounced. The 10-year gilt yield has risen above 5.2%, while the 30-year yield is nearing 6%. That compares with a 5.12% 10-year yield when Truss was serving as prime minister in 2022.
The bond market weakness is not limited to Britain. Government bond yields have also risen in the U.S., Japan, France and Germany, reflecting broader investor concerns over elevated debt, persistent inflation and the long-term sustainability of public finances. Since bond prices move inversely to yields, the rise in yields signals a widespread decline in bond prices.
Truss argued that the most politically viable response would be to accelerate economic growth through supply-side reforms while restraining government spending. She nevertheless expressed concern that policymakers may have allowed the situation to deteriorate to the point where compulsory emergency spending cuts become necessary.
U.S. government bonds have also come under renewed pressure. The benchmark 10-year Treasury yield has moved above 4.8%, reversing the decline that followed Treasury Secretary Scott Bessent’s announcement last month of a buyback program targeting longer-dated debt. The yield had previously fallen as low as 4.62%.
The reversal has also affected assets commonly associated with the debasement trade. Gold climbed to around $4,700 an ounce before retreating toward $4,300, roughly the level where it traded when the buyback intervention was announced.
Bitcoin has experienced a similar pullback after a strong advance. BTC climbed from about $64,000 to nearly $81,000 before falling back toward $76,500. Even after the decline, bitcoin remains well above its level before the announcement.
