Fed rate cuts fail to pull down treasury yields

The Federal Reserve has cut interest rates multiple times since late 2024, yet long-term borrowing costs have remained elevated as bond markets no longer follow the central bank's lead.

Federal debt stood at $37.6 trillion as of September 2025, with interest payments reaching $1.2 trillion in fiscal year 2025. The Treasury issued $30.2 trillion in marketable securities that year to refinance maturing debt and cover new borrowing. When the Fed trimmed 100 basis points across three cuts by the end of 2024, the 10-year Treasury yield barely moved. By September 2025, after an additional cut, the yield remained nearly unchanged from a year earlier.

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Illustration of Bitcoin price falling below 82000 due to rising treasury yields
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Bitcoin falls below $82,000 as treasury yields surge

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Bitcoin traded at $79,083 on May 15, down more than 3 percent after failing to hold above $82,000 resistance. Rising US Treasury yields are drawing institutional capital away from the cryptocurrency and into government debt.

The Federal Reserve has restarted quantitative easing following the end of tightening, adding tens of billions to its balance sheet in recent months.

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One-year Treasury bills (TES) rates hit a new record in auction number 13 by the Public Credit Directorate, reaching 13.693%. This surpasses the previous high and marks a 2.2 percentage point increase so far this year. The upward trend raises concerns over the Colombian Government's borrowing costs.

Rising US Treasury yields reached 5.18 percent on May 20, pressuring Bitcoin prices below $80,000. Spot Bitcoin ETFs recorded net outflows of about 14,000 BTC in the latest week.

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US stock markets tumbled after the Federal Reserve kept interest rates unchanged and signaled just one rate cut this year. The Dow Jones dropped 768 points, while the S&P 500 and Nasdaq fell over 1.3%. Rising oil prices, geopolitical tensions, and an increase in the Producer Price Index contributed to the uncertainty.

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