Breaking News: Bond Markets Selloff. Prices Collapsing. Investors Bailing. Global Monetary Reset? transcript

Hello dear friends. My name is Clive Thompson. Today is Tuesday, September 8th, 2026, and as you can see from the clock behind me, it's coming up to midday. Today, global bond yields are soaring, bond prices are falling. I'm going to be talking about what's going on, what's happening, why it's happening, what it means for gold and silver, what it means for equities, what it means for Bitcoin, what it means for your mortgage, what it means for the economy as a whole, and what's going to happen next.

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The value of investments might go up or down. You might not get back the amount you started with. Total loss is always possible. Always consult with an investment advisor before you do anything and make sure that investment advisor understands your personal situation and can take it into account. Never invest so much in any single investment that your decisions to buy, hold, or sell might be driven emotionally due to the price changes.

Therefore, only invest a little and when you do invest, invest gradually and do your own due diligence anyway, irrespective of whether you have an advisor. Before I start, please watch out for any scammers pretending to be me in the comments below. I never ask anyone to contact me by WhatsApp, Instagram, Facebook, or Discord or any other service. I don't have your email addresses. I'll never be emailing anybody because I can't and I don't want your email addresses.

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That's down to Google's algorithm deciding to do it. Second thing, people sometimes comment that my face is too dark. They can hardly see me. Well, thank you very much. I'm glad you'd like to see me. I do have three light sources. They're things I've got two of them which are like like this one. You know what should I do? Put them here? Put them here? I don't know. It's It's quite hard to say where I should put them.

One of them's one of these big square light sources. But I think the light is quite good today. I have to close the curtains cuz because otherwise the light shines on the screen behind me. Volume-wise, a few people say they can't hear me. They've elderly. I'm sorry but I've got my volume really at the maximum that's allowed by YouTube. All you can do is try and turn it up somehow at your end. I'm sorry about that. And the last question I sometimes get, people say, "Are you reading from the screen?

Are you reading AI?" Well, the answer's no. These These are my notes. That's That's kind of what I work from. It's not AI. Um but of course sometimes I do have to read things on the screen. So, I might have got something written on the screen but usually it's my own voice and my own opinion. And that's why when I make mistakes I like you to forgive me. So, if I say systematic instead of systemic, that's just a slip of the tongue.

Please forgive me. The main thing I'd like to do is thank everybody for the lovely comments. Every video has a large number of really nice, really lovely comments and it's those lovely comments which encourage me to keep offering my information and my knowledge to everyone free of charge and I hope you can all benefit from it and learn from it. Something important is happening in the global bond markets and it's not just the USA.

Yields have jumped in the USA, in the UK, Germany, France, Japan, Italy, Canada, and even Australia. The 10-year yields are high and the 30-year yields are uncomfortable. Behind me, you can see the yields on various government bonds. So, the US government bonds in green there, UK government bond yields in yellow. These are the 10-year yields you're looking at. The Japan government bond yield 10-year in red and green, German in purple there, and the France in gray, and Belgium in yellow and blue.

So, the yields are, as you can see, at multi-year highs, in some cases multi-decade highs. These are the 10-year yields. Uh and they're all uh pretty much close to the record. The US government uh maybe you can see here, look at the chart, it's it's uh not quite it maybe about the same level as it was um in at some point in 2023. But, broadly speaking, the yields have gone up a lot across the board. If I move across, that's the 10-year yields.

I'll move across to the 30-year yields here and behind me, you can see now the 30-year yields are all pushing on multi-year highs. For governments in general, this is a serious situation. It's a very worrying situation because it increases the cost of their funding as the existing debt matures and has to be uh re-borrowed or uh they have to borrow money to repay the previous bond holders. And that new new money which is borrowed will be borrowed at a much higher interest rate than the maturing debt.

When government bond yields rise, it affects almost everyone in some way. It means that the cost of mortgages are going to go up. It means corporate borrowing costs are going to rise, infrastructure finance rises, and even credit card bills might rise. Ultimately, this can have an effect on the price of assets generally and I'm going to talk about that a little bit more later. This isn't a problem of just one country in trouble.

It's not a problem of one country becoming unfinanceable. It's a global problem driven by investors repricing the amount that they want to earn before they'll lend money for 10, 20, or 30 years. And the trouble for governments is when that happens, it increases their borrowing costs across the board. And that's at a time when they are running fiscal deficits and the more they run the deficit, the greater the interest cost becomes.

Let's briefly look at the United Kingdom and the cost of borrowing there. If I go here, I'm going to look at the 30-year government bond yield and you can see the yield is touching on virtually touching 5.90%. Let's call it near enough to 6%. That's a very tough borrowing cost when the debt to GDP is the highest it's ever been. But to put that in perspective, the borrowing costs around the world are very high. For example, in the United States, the 30-year is at 5.24%.

United Kingdom, 5.9% we just mentioned. Um Italy, 4.96%. France, 5.01%. And Australia, 5.68%. In this video, I use the word bonds or government bonds to refer to bonds in general. However, they do have different names around the world. Let's start with the United States. Anything maturing less than 1 year away is called a Treasury bill in the United States. Notes are or Treasury notes are the ones which are maturing from between 2 and 10 years and anything maturing more than 10 years away is called a Treasury bond.

In the UK, government bonds are called gilts, g i l t s. In Germany, they're called German Federal Government Bonds, or the commonly used word is Bund, b u n d, the Bund. In France, they are obligations assimilables du Trésor, which is pronounced often used OAT, obligations assimilables du Trésor, OAT. In Japan, people refer to those Japanese Government Bonds or JGBs, and Italy, they call them BTPs. Canada refers them to to them as Government of Canada Bonds, and Australia calls them Australian Government Securities, or you might see the letters AGS used for Australian Bonds.

Although these names change around the world, the underlying principle is the same. When investors demand a higher yield to lend you money to the government, they will pay a lower price for the bond. So, bond prices fall when you see that yields are rising, and the longer dated the bond is, the faster the prices fall. So, at the moment, we're seeing yields rise, and that means the longest dated bond prices are falling fastest.

The reason longer dated bonds fall faster is because investors who bought a bond with a fixed coupon or interest rate are locked into that interest rate for a much longer time. So, when yields start to rise, they're missing out on that higher yield for a longer period. Therefore, they're likely to sell the bond much more heavily if it's a long dated one than a short dated one. What's happening? Bond yields are rising everywhere and rising fast.

Why are they rising? It's not just an inflation factor, although inflation obviously does play a role here. It's more a repricing of risk. It's investors repricing the amount they want to earn to lock their money away for 10, 20, or 30 years. Investors are seeing two risks. The first one is that inflation will stay higher for longer, and that of course is driven in part by the oil price this week, which has rocketed up to over $99 a barrel.

And that's on the back of the Middle East fighting, which is intensifying. But secondly, investors are seeing that uh governments will main or central banks will will remain more restrictive in their monetary policy for a while, i.e., keeping rates high and potentially rise raising the rates. And let's have a quick look at the CME FedWatch here to see what the expectations for a rate rises. So, the next meeting of the Federal Reserve is in 8 days, 7 hours, and 32 minutes, according to the CME Group FedWatch.

And if we scroll down here, we can see that the current target rate is 3.5% to 3.75%, but the expectation is that that could rise to 3.75 to 4% at the next meeting. And the probability of that happening is 60%, roughly 60%. That's the meeting of the 16th of September. I mean, let's go forward to the 28th of October, and we can see the that particular rate drops down to a 55% probability. Go to January uh 2027, early next year, and the probability the rate staying at the present rate is only 10%.

And go to July, and go to September, uh and October next year. So, October next year, the chance of the rate being as low as it is the the is only 4%, with every possibility being a higher rate even at a very small probability of a 5.25% instead of the current 3.5 to 3.75. Another thing you may have noticed is that the 10-year bonds have a lower yield than the 30-year bonds. I don't mean they have a low yield, they have a high yield, but the the 30-year bonds have a higher yield than the high yield of the 10-year bonds.

The reason for that, it's called the yield or rather the term premium. Investors demand a higher rate to lock their money away for a longer period because there's more uncertainty over 30 years than there is over 10 years. And there's more uncertainty over 10 years than there is over 3 months or 6 months or 2 years. So, it's quite normal that you have higher yields for longer dated bonds. People get rewarded extra to lock their money away for a longer period.

Now, it's not always going to be higher yields at the longer dated with a longer dated bonds, but that is the usual situation and they call that a positive yield curve. What it means is yields at longer date are higher than the short date. So, as an example just to illustrate that, we can see that the US government's 10-year yield is 4.8% and if I flip over to the 30-year yield, I'll see that it's 5.26. So, 4.8 for 10, 5.26 for 30.

Same thing applies to Germany. Let's look at Germany. The German 10-year yield is 3.38% you see on the screen there and the 30-year yield is half a percent higher at 3.84. Now, an interesting thing you'll notice here if you look at these yields, both Germany and France are in the Euro. So, you'd have thought that they're both high quality governments and you would have thought that the yield should be the same, but the German 10-year yield is 3.38, and the French 30-year uh sorry, 10-year yield is 4.24.

So, France's uh your bonds have half a percent higher yield than German. So, what does that mean? It means that people are worried that over 10 years, they'll be less likely to get paid if they lend to France than if they lend to Germany. Or at least if they do get paid, they're less likely to get paid in something which is valuable. Uh although officially both these bonds should repay in euros. And let's flip over to the 30-year difference between German and French bonds.

So, the 30-year yield on German bonds is 3.84, and the 30-year yield on French bonds is 4.99, more than 1% higher for exactly the same currency, exactly the same maturity. Well, what's that reflecting? It's reflecting investors have less confidence in France than they have in Germany, and they're saying, "Will I get back euros or valuable euros if I lend to Germany? And will I get back euros or valuable euros if I lend to France?" Well, it investors are not seeing it as the same risk.

The pricing is very different. Over 1% higher yield over 30 years. That means if you invest in a French government bond over the 30 years, and it does repay in the same currency as Germany, i.e. euros, you'll have earned 30% more by holding the French government bond compared with the German government bond. But, investors are quite happy to hold the German government bond and earn a bit less over those 30 years because they trust Germany more than they trust France.

I guess we'll come back to that in a minute. These higher yields are a worry for the governments concerned. The reason is they have debt which is maturing and they have to borrow to repay the old debt. The trouble is the yield or the interest rate that they have to pay when they borrow the new money is much higher than the interest rate they were paying on the maturing debt. And that increases the interest burden on these governments as a percentage of GDP.

So, what we're seeing around the world is that the interest burden is rising much faster than GDP is rising and it's becoming a bigger component of the government's budget every year. That's a worry because you can't obviously have the interest cost rising much faster than your uh income is rising. That's the what the government collects in taxes because sooner or later the investors say, "Hey, this is this is like a a death spiral.

Uh it's never going to end." Obviously, a government is not the same as a family, so it's not really fair to compare the two, but let's just take an analogy of a family. If you have a family who are running up their bills on the credit card and every month their credit card debts gets bigger and bigger at a faster and faster pace, much faster than they can increase their earnings, over time the interest that they're going to be paying is going to be increasing more and more and consume a larger and larger percentage of their income until the point is reached when they can't even service the interest out of their monthly income.

And you know what happens at the end. Of course, the family will go bust. Now, I'm not suggesting for a moment that governments are going to go bust. When you effectively control the central bank and obviously central banks will say they're not controlled, but when you effectively control the central bank, you don't go bust because you can print money to pay off all the debts. But what you can do and this is a worry, you print money to pay off all the debts effectively creating some sort of high inflation or worse, a hyperinflation, and then the government starts to bring in restrictions and possibly the central bank starts a new currency.

Let's call it the currency B or the new dollar, the new pound, or the new euro, or let's call it the central bank digital currency. It doesn't really matter. They bring in a new currency and the government passes legislation to say you can only use the new currency. The old currency is still valid for certain things, but it becomes more and more restricted. So, it becomes almost impossible to transfer your old currency into the new one um cuz there's some sort of exchange control or capital control over it.

Um now that way over time the government can end up leaving the old currency and its old debt behind in a what is becoming a defunct currency and as a new one comes into existence. Now that's just a possible way forward for governments. I'm not saying it will happen. There are many other scenarios, um but none of those scenarios are good for bondholders and that's why when investors invested longer dated bonds, they expect a higher interest rate to account for that increased risk.

Around the world, debt, that's government debt, is now higher than the pre-pandemic levels. I don't mean higher in absolute terms. In every case, it's higher in absolute terms. I mean higher in terms of as a percentage of GDP. As an example, the United States before the pandemic, the debt-to-GDP ratio in 2019 was 108.8%. Right now, it's 123.9%. Germany has gone from 59.8%, which was allowed within the Maastricht Treaty, to now 64.4%, which is above the 60% maximum agreed under the Maastricht Treaty.

France, which has long exceeded the uh Maastricht Treaty agreement, uh was 98.2%. It's now 117.5%. And the same kind of thing applies to the United Kingdom, Japan, Italy, Spain, Australia, Canada, and so on. In general, the debt is becoming a larger part of each economy. Why is the debt increasing so much? Simply because governments are spending more than they can earn in taxes or other revenues, and they're spending more than they ever spent before.

It's very easy to increase your spending, very hard to cut that off once you started spending the money. France is in trouble with a minority government which is deeply unpopular. Their debt to GDP at the moment is 117.5% and that's likely to rise above 120% next year. Their debt to GDP before the pandemic was 98%. They've got a budget coming up, but it's likely to be impossible to get any agreement from the political parties to the 2027 budget.

Um that budget is due out at the end of this month, and there's going to be a lot of political infighting. So, in the end, there might be just something after a lot of fighting, uh nothing but a token deficit reduction, maybe down from 5% to 4.9% of GDP, which is well above the allowed EU limits. What happens next? Well, yields are reaching very uncomfortable levels. I think that if they stay here, and I think they will, uh the governments will be forced to act.

They'll use jawboning, i.e. trying to talk the yields down to start with, and if that fails, then the central banks will start to do their jawboning, talking the yields down, and threatening to intervene, which obviously would bring in buyers to the bond market. And if that fails, they'll actually act, uh in my opinion, it's not guaranteed, by starting to buy government bonds. And that's when that when that starts, that is uh inflationary, but inflationary more for asset prices, and that's when I think the price of certain assets, including gold and silver, could actually rocket upwards.

So, let's just recap. Bond yields are rising, they're at multi-year highs. It's not a single country problem, it's a global issue. Global bond yields are rising. That has severe repercussions on the economy and on interest rates and on mortgages and on corporate borrowing and all kinds of things like that. It seems possible that if these rates stay where they are, central banks might be invited to intervene, or they might be forced to intervene.

And if that happens, that will be very explosive down the line for asset prices, but in the short term, these higher yields are likely to cause asset prices like gold and silver, like equities, to go lower. But, the minute there's perceived to be some intervention, or rather, even if we perceive that that intervention is about to happen, but it's not happened yet, that alone could drive asset prices much higher. Ladies and gentlemen, thank you very much for watching.

Before I go, I'd like to invite you to have a look at the Little Trot books. I'm just moving this out of the way behind me so you can see the illustrations from the Little Trot books. These are beautifully written books that I have written myself. They're on Amazon. They are books which children are absolutely loving. We've got nothing but five-star reviews, and I think that the fact that they've got an educational aspect, because there's financial words in there, will get your children started very early on in the idea that they should be looking at money, learning about money, and hopefully saving money.

So, book one is called Little Trot learns to save money. Trot is spelled t r o t. Little Trot, t r o t, learns to save money. Just put in Clive Thompson and Little Trot on into Amazon and you'll find these books. If you do buy them, I'd love you to drop me a note in the comments below. That'd be really great. And thank you very much indeed for being a fan. My name is Clive Thompson and I'd like to wish you all a very nice afternoon.

Bye-bye now.