US Debt, Rising Yields and Gold Are Sending a Warning to Markets

A combination of rising US debt, stubborn bond yields and a sharp gold rally is raising questions about how long the current market environment can continue.

The clearest warning is coming from the bond market. The 30-year Treasury yield climbed back to 5.26%, reversing the entire decline that followed Treasury Secretary Scott Bessent’s expanded bond-buyback announcement. The 10-year yield also rose to 4.71%. The newsletter argues that investors initially welcomed the buybacks, but quickly concluded that they were too small compared with the amount of new government debt entering the market.

The longer-term numbers explain the concern. US federal debt has risen from $1.2 trillion in 1981 to $39.9 trillion, while M2 money supply increased from $1.6 trillion to $23.2 trillion. Since January 2025 alone, debt has increased by $3.7 trillion, or roughly $6.4 billion per day, compared with a $1.7 trillion increase in M2.

Gold Is Already Reacting

Gold reached $4,486.89, gaining 10.89% in just 13 sessions since August 3. Notably, gold continued rising even as Treasury yields rebounded, which the author interprets as investors becoming increasingly concerned about government debt and the longer-term value of the dollar.

Stocks, however, still have an important source of support. The newsletter’s global liquidity indicator is sitting at a record 113.2 and historically leads the S&P 500 by around 11 weeks. Based on that relationship, liquidity conditions remain supportive for equities through roughly early November 2026.

That creates an unusual market setup: liquidity remains bullish for stocks in the short term, while bonds and gold are signaling growing concerns about US debt and monetary policy.

Investor takeaway: There is no clear signal that the equity rally is ending yet. But with long-term Treasury yields above 5%, federal debt approaching $40 trillion and gold surging, investors are increasingly watching whether America’s debt problem eventually becomes a bigger issue for the dollar, bonds and stocks.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.