As short-term U.S. Treasury yields rise, the market tightens up first by one notch.
Citing an analysis by Jonathan Levin, a columnist for Bloomberg, BlockBeats says that as the Federal Reserve restarts rate hikes, the U.S. Treasury market is shifting from concerns about fiscal deficits and long-term debt supply to expectations that rates will be kept high for longer. Since Fed Chair Powell’s hawkish remarks at Jackson Hole in late August, the real yields on 2-year and 5-year Treasury Inflation-Protected Securities (TIPS) have risen by roughly 57 and 64 basis points, respectively.
Since September, the yield on U.S. 2-year Treasuries has climbed cumulatively by about 55 basis points. Meanwhile, the spread between the 10-year and 2-year yields narrowed at one point to around 17 basis points—the lowest level since early 2025. The market currently assigns roughly a two-thirds probability that the Fed will hike again in October, and has priced in an increase over the coming year of at least the equivalent of three 25-basis-point hikes.
On one side: yields continue to push higher and the dollar stays relatively strong. On the other: risk assets like BTC and ETH are more sensitive to interest-rate changes. If the 2-year yield keeps surging higher but BTC doesn’t break a key support level, it suggests there’s still demand/absorption in the market. But if rates step up further while risk appetite retreats in tandem, the downside pressure will be more direct. Which do you care more about—2-year U.S. Treasuries or the dollar?
Source: BlockBeats
#BTC #ETH
Figure 1: Short-term U.S. Treasuries surge higher, suppressing risk appetite · Source: partial screenshot of the page
Image source: https://www.theblockbeats.info/flash/369371
Citing an analysis by Jonathan Levin, a columnist for Bloomberg, BlockBeats says that as the Federal Reserve restarts rate hikes, the U.S. Treasury market is shifting from concerns about fiscal deficits and long-term debt supply to expectations that rates will be kept high for longer. Since Fed Chair Powell’s hawkish remarks at Jackson Hole in late August, the real yields on 2-year and 5-year Treasury Inflation-Protected Securities (TIPS) have risen by roughly 57 and 64 basis points, respectively.
Since September, the yield on U.S. 2-year Treasuries has climbed cumulatively by about 55 basis points. Meanwhile, the spread between the 10-year and 2-year yields narrowed at one point to around 17 basis points—the lowest level since early 2025. The market currently assigns roughly a two-thirds probability that the Fed will hike again in October, and has priced in an increase over the coming year of at least the equivalent of three 25-basis-point hikes.
On one side: yields continue to push higher and the dollar stays relatively strong. On the other: risk assets like BTC and ETH are more sensitive to interest-rate changes. If the 2-year yield keeps surging higher but BTC doesn’t break a key support level, it suggests there’s still demand/absorption in the market. But if rates step up further while risk appetite retreats in tandem, the downside pressure will be more direct. Which do you care more about—2-year U.S. Treasuries or the dollar?
Source: BlockBeats
#BTC #ETH
Figure 1: Short-term U.S. Treasuries surge higher, suppressing risk appetite · Source: partial screenshot of the page
Image source: https://www.theblockbeats.info/flash/369371
