Peter Schiff believes the US bond market’s troubles are only beginning as Treasury yields continue to climb. The economist argues the long-running bond bull market has already ended and expects borrowing costs to move considerably higher from here. His warning comes as pressure continues to build across the Treasury market.
Bonds have further to fall
Schiff said the bond market “already broke” when yields bottomed during 2020, ending a bull run that stretched back roughly four decades. With the 10-year yield now near 5%, he believes 6% could eventually become another stepping stone rather than a ceiling.
Rising US debt and persistent inflation sit at the centre of his argument. Treasury debt has passed $40 trillion, while higher borrowing costs are making that burden more expensive to service.
Attempts by the Federal Reserve to suppress yields through renewed bond purchases would only create another problem, according to Schiff. More monetary expansion could fuel inflation, he argued, causing investors to demand greater compensation for holding long-term debt.
Bringing inflation under control would require dramatic government spending cuts and allowing interest rates to rise further, Schiff said. Such measures could trigger recession, job losses, defaults and falling stock and property prices in the short term.
Gold over Bitcoin
Gold remains Schiff’s preferred protection against declining dollar purchasing power, while he rejects Bitcoin’s claim to being “digital gold.” Central banks moving reserves toward bullion also form an important part of his argument.
Bitcoin, by contrast, has failed to convince him despite reaching record prices during the latest cycle. Schiff argues its political support could also become a vulnerability if Washington’s approach to crypto changes.
Following the interview, the Fed raised rates by 25 basis points to 3.75%–4%, its first increase since 2023.
That move may not change Schiff’s broader thesis. He had already described a quarter-point increase as a “cosmetic hike,” arguing much stronger action would be needed to contain inflation and restore confidence in bonds.
