Call them signs of the times.

On Tuesday, long-end UK yields were the highest in nearly 30 years while gold touched a new record.

In the strictest sense, the moves were unrelated. Successive UK governments have struggled to establish, let alone sustain, credibility with markets vis-à-vis the nation’s fiscal trajectory. Put differently, when it comes to incurring the ire of the bond vigilantes, Keir Starmer and Rachel Reeves are in “good” company. Those are the heaviest of scare quotes.

Reeves has an autumn budget coming up and just about the last thing she needs in that context is a restive bond market. The higher yields go, the less room she has.

You’re reminded that inflation’s drifting higher again in the UK, putting the BoE in a bind. At last month’s meeting, Andrew Bailey had to hold two votes for the MPC to reach a consensus. In the macro projections accompanying the August policy decision, the bank marked up its inflation projections meaningfully across the entire forecast horizon.

So, gilts are factoring in both fiscal worries and a still-onerous inflation backdrop. The result: 5.70% give or take on the 30-year.

Note that the DMO’s doing everything it can. In April, the UK’s debt manager slashed 30-year sales such that they comprise just 10% of the issuance mix, the lowest ever. This most recent selloff at the UK long-end thus comes even as the supply-demand picture’s ostensibly favorable.

The pound slipped on Tuesday. That’s bad news. To repeat a warning that’s all too familiar in the post-Liz Truss world, reserve currencies issued by advanced economies shouldn’t weaken in the presence of higher bond yields. That’s the stuff of emerging markets.

Meanwhile, gold hit a new record north of $3,500.

As the figure reminds you, bullion’s done quite well over the past three years, topping the cross-asset leaderboard in 2024, when it returned 27% after a solid 12% in 2023. It’s up 29% so far in 2025.

There’s no mystery there: Between concerns about the fiscal trajectory across much of the developed (i.e., reserve currency-issuing) world and the prospect that a beholden Fed will find itself obliged to embark on an overly-aggressive rate-cutting campaign, debasement fears are front and center.

The connection between perceptions of fiscal profligacy and investor appetite for gold wasn’t lost on The Guardian which, while documenting the Reeves budget drama, casually mentioned that as “bond prices fell on Tuesday, traders piled into precious metals.”

If you’re curious, the pros have ample room to add debasement hedges.

The figures above are from the August vintage of BofA’s monthly fund manager poll.

“82% of FMS investors said they have not started to structurally allocate to crypto,” the bank’s Michael Hartnett remarked.

Note that more than four in 10 BofA survey panelists described their gold position as close to 0%. When you adjust for that, total portfolio exposure to gold among respondents to the bank’s poll is just 2.2%.