The safe haven is being sold

Posted on: 24 August 2026

Lending money to the British government for thirty years currently pays 5.80 per cent. That is more than the United States pays over the same horizon, more than any other G7 borrower, and higher than the rate reached during the last week of September 2022, when thirty year gilt yields moved 130 basis points in three trading days and the Bank of England bought bonds to stop pension funds unwinding into a falling market. Nobody has called an emergency this time. The number is simply there.

Elsewhere the picture is the same. The German ten year sits at 3.25 per cent, dearest since 2011. The French equivalent is at 4.10, a level last seen in 2008. American thirty year debt closed the week at 5.33 per cent, which has not happened since 2007.

The explanation doing the rounds is geopolitical risk. The Strait of Hormuz is shut and crude is above 92 dollars a barrel.

The trouble with that reading is that frightened markets buy American government debt rather than sell it. Buying it pushes the price up, and when the price of a bond rises its yield falls. On the morning of 24 February 2022, as Russian columns crossed into Ukraine, the American ten year paid less by the evening than it had at dawn. Four decades of conditioning, and the reflex has always held. This time the shelter is being sold along with everything else.

Then there is China. Chinese ten year government debt yields 1.69 per cent, close to its lowest since July 2025. Beijing buys more Gulf crude than anyone alive, so a closed Hormuz costs it a great deal more than it costs Washington. If war risk were driving this, Chinese borrowing costs would be climbing with everyone else's. They are falling.

What is being priced has little to do with the war. It is the state of Western public finances, and China sits outside that for two reasons nobody envies her, namely prices that fall instead of rising and domestic savings that are not legally permitted to go anywhere.

Look at where along the curve the movement sits. American thirty year debt passed its autumn 2023 high months ago. The ten year, stuck at 4.74, is still below it. All of the action is at the far end, which is precisely where central bank decisions stop reaching. When prices move there, the message is not about rates over the coming months. It is about who signed the paper.

There is also something I have seen almost nobody connect. In June, Kevin Warsh, chairman of the Federal Reserve since May, stopped publishing both the individual rate projections of committee members and any guidance on future moves. A bond market that loses its official reference point gets more expensive, not calmer. Every manager now builds the forecast alone and charges for the risk of getting it wrong. Greenspan could afford that silence because federal debt stood at roughly half today's share of national output and inflation stayed where it was put. Warsh has inherited the style without the conditions that made it survivable. The extra yield demanded for lending long is partly the price of the fog.

Meanwhile Japanese ten year debt has reached 2.954 per cent, a thirty year high. Tokyo spent a generation getting back to a normal interest rate and arrived in the wrong month.

Which brings the thing back to Westminster. In 2022 the gilt crisis was written up as a British illness, the work of a reckless chancellor and a budget nobody had costed. Sack the pair of them, restore the grown ups, and the fever would pass. The fever passed. The price did not. Britain is paying more today, with an orthodox Treasury and no mini budget in sight, than it paid in the days when the Bank was buying gilts to keep the market open. The diagnosis was wrong. Britain was not the sick patient, it was the first one.

So I would not buy long dated paper reading the fall in prices as a discount. Anyone buying thirty year gilts this morning is not buying a yield, they are taking a position on the fiscal discipline of governments that have no incentive whatsoever to exercise it, and doing so while the Treasury competes for available savings with the billions companies are burning on data centres.