Liz Truss Warns Bond Market Rout Could Trigger Emergency UK Spending Cuts

Former U.K. Prime Minister Liz Truss has warned that rising government debt and currency debasement are driving bond yields higher globally, with Britain among the major economies facing some of the greatest pressure.

“Global bond yields are spiking due to mountains of debt,” Truss said in an interview, pointing to the U.K. as one of the most severe cases. She also criticized the Bank of England for printing money and weakening the currency.

The U.K. has seen borrowing costs rise sharply compared with other developed markets. The 10-year gilt yield has moved above 5.2%, while the 30-year yield is nearing 6%. By comparison, the 10-year gilt yield stood at 5.12% when Truss was prime minister in 2022.

Because bond prices and yields move in opposite directions, the increase in yields reflects a broad selloff in government debt. The pressure extends well beyond Britain, with borrowing costs also climbing in the U.S., Japan, France and Germany. The moves underscore concerns surrounding high debt levels, inflation and governments’ ability to maintain sustainable fiscal positions.

Truss said governments should focus on boosting economic growth through supply-side policies while keeping spending under control. However, she warned that the deterioration may already have progressed too far and could ultimately result in emergency spending reductions being imposed.

The U.S. 10-year Treasury yield has also climbed above 4.8%, reversing the decline that followed Treasury Secretary Scott Bessent’s announcement last month of a program to buy back longer-maturity government debt. The yield had initially dropped to about 4.62%.

Meanwhile, assets linked to the so-called debasement trade have pulled back from recent peaks. Gold, which climbed to roughly $4,700 an ounce, has since fallen to around $4,300, close to its level when the intervention was announced.

Bitcoin has followed a similar pattern. BTC rose from approximately $64,000 to a high near $81,000 before retreating to around $76,500. Despite the pullback, bitcoin remains significantly higher than it was before the announcement.