Are Bond Vigilantes Buying Bitcoin?

What Rising Bond Term Premia Could Be Telling Us

The global bond sell-off is being driven by rising term premia—the extra yield investors demand to hold long-term debt—as post-COVID fiscal deficits, ageing demographics, and surging debt issuance fuel concerns over sustainability. While the US remains relatively resilient (with term premia up just 10bp vs. 37bp in Germany and the UK), its yields are still artificially suppressed by circa 50bp due to ‘Indirect QE’ (short-term debt issuance), meaning 10-year Treasuries should already be yielding above 5%. Japan’s worsening debt outlook and Europe’s fiscal loosening are amplifying global pressures, forcing the US Treasury to shift issuance towards shorter maturities and, hence, boost liquidity. Rising term premia could support risk assets (stocks, gold, Bitcoin) if driven by liquidity injections, but a disorderly spike in yields or loss of confidence in sovereign debt (e.g, Japan’s Gerald Ratner moment) poses systemic risks. Investors should brace for higher yields while monitoring liquidity-driven tailwinds benefiting equities and monetary inflation hedges, like gold and Bitcoin.