The 'Debasement Trade' Just Hit A Wall—And The Bond Market Knows Something Gold Bugs Don't

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

The narrative sounded perfect: gold soaring past records, Bitcoin rallying, stocks climbing relentlessly—all signs that investors were fleeing the dollar in a panic over U.S. currency debasement. But if you check what’s actually happening in the bond and foreign exchange markets, that story falls apart fast.

While precious metals have indeed surged impressively this year—gold jumping 50%, with silver and platinum posting even more dramatic gains—the markets that matter most for debasement fears are telling a completely different story. And that disconnect reveals something crucial about what’s really driving today’s market moves.

Don't Miss:

Earn While You Scroll: The Deloitte-Ranked #1 Software Company Growing 32,481% Is Opening Its $0.50/Share Round to Accredited Investors. Missed Nvidia and Tesla? RAD Intel Could Be the Next AI Powerhouse — Invest Now at Just $0.81 a Share

When the Bond Market Contradicts the Gold Rally

Here’s the problem with the debasement narrative: if investors truly believed the dollar was being debased through reckless fiscal policy and Federal Reserve rate cuts during persistent inflation, Treasury yields would be spiking and the dollar would be collapsing. Instead, the opposite is happening.

The benchmark 10-year Treasury yield fell to 3.93% on Oct. 17, its lowest level in over a year excluding the brief April tariff-induced turmoil, with the yield down nearly 60 basis points for the year, according to Reuters. Even the 30-year yield, which is far more sensitive to long-term inflation concerns, has fallen roughly 20 basis points in 2025

“Debasement would imply a move away from the dollar and U.S. Treasuries into assets such as gold, and there is very little evidence to back up these flows,” Jane Foley of Rabobank said.

The inflation-expectations market reinforces this point. The 10-year TIPS breakeven rate—essentially where bond investors see inflation a decade from now—dropped to 2.275% last week, the lowest since June. More tellingly, the 30-year TIPS breakeven rate hit 2.21%, its lowest level since May.

Trending: Wall Street Has Algorithms — Now Retail Traders Do Too. Invest in Option Circle Before Nov. 13

The Dollar Isn’t Cooperating Either

While the dollar did experience its worst first-half performance on record in 2025, it has been remarkably stable since April, with the dollar index ending last week almost exactly at its six-month average. Over the past month, the dollar has actually outperformed its G10 currency peers significantly, Reuters said.

Story Continues

What we’re seeing instead is something more nuanced. According to UniCredit estimates, as much as 80% of portfolio inflows into the U.S. are now currency hedged—a sign that investors still want exposure to the American economy and stock market, just not the dollar itself.

This suggests concerns about U.S. policy reliability rather than classic currency debasement driven by inflation fears.

See Also: Backed by $300M+ in Assets and Microsoft's Climate Fund, Farmland LP Opens Vital Farmland III to Accredited Investors

What’s Really Happening With Gold and Crypto

The term “debasement trade” was coined earlier this year by JPMorgan Chase & Co (NYSE:JPM) analysts, who began flagging the concept last October by arguing that a Republican sweep would prove bullish for gold and Bitcoin due to expansionary fiscal policy. The prediction worked, but perhaps for the wrong reasons.

Rather than pure debasement fears, what we’re likely witnessing is a combination of central bank diversification away from dollars, private sector portfolio reallocations, and momentum-driven buying, according to Reuters analysis.

Reuters argues that we may be reaching peak “debasement trade” as investors search for simple narratives in an increasingly complex world. Even though the $4 trillion global crypto market and $28 trillion gold market may be emitting dollar debasement warnings, the $28 trillion Treasury market and nearly $10 trillion-a-day currency market are not.

Read Next: From Moxy Hotels to $12B in Real Estate — The Firm Behind NYC's Trendiest Properties Is Letting Individual Investors In.

Image: Shutterstock

This article The 'Debasement Trade' Just Hit A Wall—And The Bond Market Knows Something Gold Bugs Don't originally appeared on Benzinga.com

View Comments