The latest 2-Year Treasury Note Auction saw yields climb to 3.955%, up from 3.795% in April, underscoring persistent investor concerns about Federal Reserve policy and inflation trends.
Despite the increase, we saw some demand for Treasury notes, with a high indirect bidder participation of 63.5%, signaling that, despite yields being on the rise in recent weeks—investors still show confidence in U.S. debt, particularly in short-term securities like the 2-Year Treasury Note.
Yields have been extremely volatile in recent times, most likely due to the economic uncertainty surrounding the White House’s aggressive foreign trade policy. While analysts and financial markets have been anticipating one—if not many—interest rate cuts in 2025, the fact of the matter now is that expectations may be shifting.
The rising yields suggest that investors aren’t betting on rate cuts happening anytime soon, as they demand higher returns to compensate for the risk that borrowing costs will remain elevated for a longer period.
Bitcoin reacted negatively to today’s 2-Year Note auction, slipping below $110K after the announcement. Currently trading at $109,906, the world’s largest cryptocurrency by market capitalization saw a significant intra-day decline.
This led BTC to lose over 0.7% in less than an hour, reflecting broader market uncertainty and investor sensitivity to rising yields.
The rest of the week will give us key insights into what to truly expect of the next interest rate decision by the Federal Reserve. On Wednesday and Thursday, we’ll have the 5-Year and 7-Year Treasury Note Auctions, which will provide further indications of investor sentiment toward interest rates and inflation expectations.
On Friday, we’ll get an even clearer picture of where the Fed stands as the Core PCE Price Index, the Federal Reserve’s preferred measure of inflation, will give us insight into current inflationary pressures in the U.S.
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