The Great Debasement Debate Is Rippling Across Global Markets

Beneath the surface of the short-term ups and downs of financial markets, a longer-term repricing of multiple assets may be underway as investors seek to protect themselves from the threats posed by runaway budget deficits.

While a fresh round of tariff threats between the US and China stole the headlines Friday and sent traders scurrying from riskier assets and into bonds, money managers have been increasingly discussing a phenomenon known as the “debasement trade.”

Those who believe in it are pulling away from sovereign debt and the currencies they are denominated in, fearful their value will be eroded over ...