The bond vigilantes are sharpening their knives. The last five trading sessions have seen a sudden and potentially ominous shift in the reflexes of the gilts market, a sign that "hard Brexit" rhetoric has rattled global debt managers.
"For the first time, foreign investors are beginning to question the credit-worthiness of the United Kingdom," said Vatsala Datta, UK rates strategist at RBC.
We will find out how serious it is on Oct 31 - Hallowe'en day - when the UK Debt Management Office publishes its monthly data on foreign holdings of gilts. Central banks, sovereign wealth funds and the like, currently hold pounds 503bn of British public debt or 27pc of the total, a bigger share than UK pension funds and insurance companies.
Yields on 10-year gilts have spiked by 62 basis points to 1.14pc from their trough in August. Until last week this was purely a "reflation trade", a turbo-charged variant of what has been happening in the US and other parts of the world as markets price in accelerating global growth and a commodity rebound.
Britain got a double dose because the sharp fall in sterling automatically pushed up the likelihood of future inflation, and that is what bondholders hate most. It is easy to measure this effect by tracking the "break-even inflation rate" or other market measures of inflation expectations. "The correlation was exact. It has now broken down," said Ms Datta.
Break-even rates stopped rising last week, yet gilt yields spiked higher, a divergence of 18 basis points. RBC said the pattern in the interlocking currency and debt markets is that sterling is no longer trading like a bona fide reserve currency.
"The parallel sell-off in gilts and sterling is potentially a worrying development, consistent with the UK's having growing difficulty funding its internal and external deficits," it said.
What typically happens when a blue-chip currency like the US dollar or the Swiss franc falls is that central banks and fund managers buy more of that country's bonds to keep a constant weighting. This is a mechanical practice. It happens unless manager take a conscious decision to override their model. It is why foreign holdings of UK gilts have risen by 20pc over the last year, and why they surged at an even faster rate after the referendum. This foreign rush into gilts happened not in spite of the falling pound, but because of it.
All of a sudden this has stopped. Loose proxies such as "swap spreads" suggest an outright exodus from gilts even as the pound weakens.
It is symptomatic that the Japanese bank Nomura has issued a string of tough reports about what could happen if the British government opts to leave the EU single market, warning that an erratic UK can no longer count on the "kindness of strangers" to fund its current account deficit.
The bank is a conduit for large investments by Japanese pension funds and life insurers into the UK market and has finger on the pulse of Asian bond investors, an enormous force in the global debt markets.
The market turmoil can be exaggerated. Five-year credit default swaps - a gauge of bankruptcy risk - have so far been well-behaved for the UK, creeping up from 33 to 38 over the last five months. But they are now higher than in France. The gilts sell-off is nothing like the drastic spike in Greek, Irish, Portuguese, Italian and Spanish bond yields during the white heat of the eurozone debt crisis, when the European Central Bank was paralysed and markets were bracing for a chain of sovereign insolvencies.
A country that borrows in its own currency and has a sovereign central bank able to act as a lender of last resort can almost always avert a public debt crisis, unless confidence in the governing institutions collapses altogether. The average maturity of British public debt is 17.74 years, the highest of any major country.
Yet there is a twist in Britain since the external debt of UK-based entities falling due over the next 12 months is over 800pc of current account receipts, the highest of 131 countries rated by Standard & Poor's. Much of this debt is owed by global banks operating in the City and largely '"nets out", but S&P warns that the sheer scale could lead to a helter-skelter ride as the pound dives.
The Bank of England so far seems content to let the currency slide. History may vindicate the Bank for throwing away the central bank manual and taking a risk in the current unique circumstances.
Gilts yields are lower today that any time during the Great Depression of the 1930s, and the world is still caught in a deflationary vice. Inflation no longer strikes terror. What is clear is that the false calm since the referendum is over. The world is itching to sell gilts.