Expectations of Federal Reserve and Bank of Japan interest rate hikes intensify, U.S. debt surpasses critical threshold, short-term pressure on risk assets sharply increases

Mars Finance News, May 17th, as of Friday’s close, the yield on the 10-year U.S. Treasury surged to a one-year high of 4.530%, surpassing the policy turning point of 4.50% that Trump previously intervened multiple times. On the other hand, leadership changes at the Federal Reserve and macroeconomic data have led to increased expectations of rate hikes, while rate cut options seem to have been completely ruled out. Meanwhile, the market has heavily priced in the likelihood that the Bank of Japan will make a rate hike decision in June (Polymarket’s probability is as high as 80%). Additionally, SpaceX’s massive funding, and renewed tensions in the Iran-U.S. conflict are also expected to significantly impact market liquidity and confidence. Considering these factors, risk assets are likely to face considerable pressure in the short term. Unless strong measures are taken to reverse the situation, the broad decline on Friday may just be the beginning of a correction.