The global bond market is enduring a brutal selloff, sending government bond yields in the US, Europe, Japan, and the UK to multi-year highs.
For crypto investors, the key indicator is the 10-year Treasury yield approaching 5%. That level pulls capital away from risk assets like Bitcoin and Ethereum, which typically suffer when safer bonds offer high returns.
Producer prices came in hotter than expected. Markets now see a two-thirds probability the Federal Reserve will hike rates again in December - not cut them. The US 30-year Treasury yield has punched above 5%, while the 10-year sits near 4.75%, a critical threshold for stock market stability.
The rout is global. UK 10-year gilt yields hit a one-year high. The pound posted its worst weekly performance since 2024. European bonds are under similar pressure. Even Japan, long a bastion of ultra-loose policy, sees yields climbing as the Bank of Japan faces pressure to tighten.
Analysts point to the return of "bond vigilantes" - large institutional investors selling government bonds to protest rising fiscal deficits and sticky inflation. Governments need to borrow more just as investors demand higher returns.
For crypto: higher real yields and a stronger dollar historically correlate with lower prices for risk assets. If the 10-year Treasury offers nearly 5% with zero credit risk, holding volatile assets like Bitcoin becomes far less attractive.