Global Debt Crisis Erupts Threatening Massive US Selloff

Taylor Kenney - ITM Trading Sep 16, 2025

Rising yields signal a global bond market reset. Japan’s exit could crash US Treasuries and ignite inflation. Here’s what this means for gold and your dollars.

The Global Bond Market Reset Has Begun; Here’s How It Ends

Could Japan Trigger the Next Financial Earthquake?

A massive shift is unfolding in the global bond market — and it could reset the entire monetary system. The signal? Surging long-term government bond yields across the globe. From the U.S. to Japan to Europe, the trend is clear: the cost of borrowing is exploding. This is the warning shot.

The phrase “global bond market reset” may sound technical, but its implications are deeply personal. This isn’t just about Wall Street. It’s about your mortgage, your savings, your retirement.

Why Bond Yields Matter to Everyone

Bond yields are more than just numbers. They’re the backbone of global finance.

Higher yields = higher borrowing costs across credit cards, auto loans, and business debt
Stock market valuations suffer as investors flee to higher-yielding debt
Housing becomes unaffordable as mortgage rates follow yields higher

And most dangerously, rising yields signal falling demand for government debt.

The Japan Shock: A Global Domino Effect

The Bank of Japan (BoJ) is stepping back. After decades of easy money policies — including zero interest rates and massive bond-buying — Japan is pulling out as the buyer of last resort.

That retreat has sent their 30-year bond yields to highs not seen since the 1990s.

Here’s why this matters:

Japan is the world’s largest creditor and the biggest foreign holder of U.S. debt
As Japanese yields rise, the incentive to hold U.S. Treasuries falls
Japanese investors are now pulling out of U.S. Treasuries, seeking better returns at home

The U.S. Debt Spiral Accelerates

With less demand for Treasuries, the U.S. must offer higher yields to attract buyers. But this makes it more expensive to service our already unmanageable debt.

The vicious cycle:

Rising yields → Higher interest payments
Higher payments → Larger deficits
Larger deficits → More borrowing

And it all collides with our so-called “exorbitant privilege” — the U.S. dollar’s global reserve status. That privilege is eroding. Fast.

Weaponizing the Dollar Backfired

When the U.S. froze Russia’s dollar reserves, it sent a chilling message: your dollars aren’t safe. Nations took note. The shift away from dollar holdings has accelerated.

Now, with trillions in U.S. debt maturing and fewer willing buyers, a funding crisis looms.

Higher borrowing costs for you and your children
Reduced access to credit for businesses
Potential mass layoffs and recession

Yen Carry Trade Unwind: The Canary in the Coal Mine

In August 2024, the “yen carry trade” began to collapse. For years, global investors borrowed cheap yen to fund leveraged bets in U.S. Treasuries and stocks. It worked—until it didn’t.

When the BoJ began tightening, the yen strengthened, and trillions in leveraged trades unraveled. The result?

S. Treasury yields spiked
Stocks sold off sharply
Volatility surged

And that was just a preview.

Why Are Global Yields Rising Despite Rate Cuts?

Central banks are holding or cutting rates, yet long-term yields are rising. Why?

Soaring deficits
Unrelenting inflation
Falling trust in central banks

Investors are losing faith. They’re demanding higher returns to hold sovereign debt. The illusion is breaking.

Stagflation Is Back: 1970s Playbook Repeats

We now face the nightmare scenario: rising inflation and rising unemployment.

Jobless claims just jumped by 27,000 — the highest in 4 years
Inflation is heating back up

This is stagflation. It crushed the economy in the 1970s and it’s reemerging today.

Back then:

The dollar was delinked from gold
Debt soared, growth stalled
S. bonds were called “certificates of confiscation”

But gold soared from $35 to $850 an ounce — a 2300% gain.

Gold & Silver: The Only Lifeboats in a Reset

The bond market is sending a clear signal: the reset is here. And those in power know it. That’s why central banks are loading up on gold.

In a system cracking under its own weight:

Gold preserves purchasing power as currencies fall
Silver offers affordable protection with industrial upside
Tangible assets like precious metals can’t be printed, seized, or devalued overnight

In a repeat of the 1970s, gold vs the dollar is a bet you can’t afford to ignore. Paper wealth may burn, but physical gold and silver endure.

The End of the Illusion

This isn’t business as usual. It’s a monetary regime shift. Japan’s move is just the spark. The firestorm will be global.

Those who fail to see the writing on the wall will suffer. Those who prepare with real assets stand a chance to thrive.

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