Big news! The U.S. Treasury bonds pressuring the Fed— the probability of a rate hike has surged to 38%! Can $BTC and $ETH hold up?

The U.S. Treasury market is issuing a final ultimatum to Federal Reserve Chair Waller. Speeches from hawks alone are no longer enough—what the market wants is hikes with real firepower.

The latest round of U.S.-Iran military conflict that erupted in July caught Wall Street off guard. International oil prices briefly broke above $100 per barrel, directly triggering large-scale selloff in the U.S. Treasury market with a total scale of $30 trillion. Since the end of June, the yield on the benchmark 10-year U.S. Treasuries has risen by more than 30 basis points in total, to around 4.678%, nearing the highest levels in nearly a decade. At the same time, the yield on the 2-year U.S. Treasuries—most sensitive to monetary policy—also climbed to about 4.328%, surpassing the Fed’s current interest-rate cap of 3.75%.

On Wednesday, the Federal Reserve will release its policy decision. According to the CME FedWatch tool, as of last Friday, the market estimated the probability of keeping rates unchanged at this meeting was 62%, but the probability of a rate hike surged from about 13% a week earlier to about 38%.

TD Securities’ U.S. rates strategy head Gennadiy Goldberg said: “This shows how worried the market is about inflation, and how concerned it is about whether the Fed can deliver consistency between words and actions.” What he was referring to was Waller’s series of public remarks about bringing inflation back to its 2% target.

Oil-price shock layered on top of pressure in the bond market has pushed U.S. Treasury yields close to their decade highs. Based on GasBuddy data, in recent days, the retail prices of regular gasoline and diesel in the U.S. have both returned to above $4 per gallon and $5.20 per gallon, respectively. After Waller held a news briefing for the first time as Fed chair in June, the U.S. Treasury market briefly rebounded, but this rally quickly fizzled. The yield on the 30-year U.S. Treasuries has remained stubbornly above 5%, causing severe losses for investors who had bet on long-dated Treasuries.

David Rosenberg, founder and president of Rosenberg Research & Associates, wrote in his report last Friday: “We did not expect this latest chapter of the U.S.-Iran war, and it’s a complex factor for any duration asset in the market right now.” He also pointed out that the continuous expansion of issuance of technology-related corporate bonds is further weighing on the U.S. Treasury market. Rosenberg said he has adjusted his portfolio, shifting his earlier underperforming long 30-year U.S. Treasuries positions into short-dated U.S. Treasuries.

Paul Christopher, head of global investment strategy at the Wells Fargo investment research institute, said: “The Fed needs to hear this signal clearly. Uncertainty is compounding and accumulating, and bond-market investors demand corresponding compensation.”

The Fed is not a monolith internally. Some members on the rate-setting committee favor suppressing inflation through rate hikes. However, the timing of any rate-hike implementation is extremely sensitive. Inflation itself erodes the real value of fixed-income assets, and rate hikes would further depress bond prices, dragging on other financial assets such as stocks.

Meanwhile, Barclays analysts expect the U.S. federal fiscal deficit in 2026 to be about $2 trillion. Ongoing large-scale issuance of U.S. Treasuries will be an important way to fill the gap, which also means supply pressure in the bond market is unlikely to ease in the near term.

Large-scale borrowing by the technology sector is also amplifying bond-market pressure. Large technology companies represented by “hyperscale cloud computing firms” are racing to issue corporate bonds to support the buildout of AI infrastructure, pushing up overall market borrowing costs. In a report released last Wednesday, Moody’s estimated that these hyperscale cloud computing firms’ capital expenditures in 2027 will be close to $1 trillion, after nearly $800 billion this year, and warned that “soaring capex, rising leverage, and off-balance-sheet commitments” will pose a threat to the credit quality of this group.

Clouds of higher-rate expectations also hang over the stock market. Last week, semiconductor stocks led the declines, with the Philadelphia Semiconductor Index down more than 4% over the week. The Dow Jones Industrial Average fell 0.4% for the week, the S&P 500 dropped 0.6%, and the Nasdaq Composite declined as much as 2.1%. Compared with the all-time high set in early June, the Nasdaq index’s closing price has fallen by a cumulative 7.8%.

Higher interest rates often suppress corporate and consumer spending, thereby dragging economic growth and eroding companies’ earnings expectations. Christopher at Wells Fargo suggested investors may wait until this round of tech-stock rotation calms down, when “a potentially better entry opportunity may emerge,” and noted that “holding some cash reserves may not be a bad thing.”

Follow me: Get more real-time crypto market analysis and insights! $BTC $ETH $SOL

#直通IPO第二期JerseyMikes # Changxing went live today with trading volume of 90.1 billion #ETH reclaims $1,900