Market Selloff Pushes Treasury Yields Lower, Potentially Boosting Crypto

Treasury Yields Slide as Trump Administration Pushes for Rate Cuts, Offering Hope for Crypto

As the Trump administration signals a push for lower interest rates, both traditional and crypto markets remain under pressure from broader economic uncertainty and risk-off sentiment.

Speaking to Fox News on Tuesday morning, Treasury Secretary Scott Bessent reaffirmed the administration’s commitment to reducing interest rates. “We’re set on bringing interest rates down,” Bessent stated, reinforcing expectations that monetary policy may soon shift in a more accommodative direction.

The 10-year Treasury yield has already fallen to 4.13%, down significantly from 4.80% just before Trump’s inauguration six weeks ago. Meanwhile, markets are rapidly adjusting their outlook for Federal Reserve rate cuts. According to the CME FedWatch Tool, the probability of at least one rate cut by the Fed’s May meeting has jumped to 47%, up from just 26% a week ago. The likelihood of two or more cuts by June has surged to 36% from 15%.

This shift in monetary expectations comes as financial markets face growing volatility. U.S. stock indexes have been in steep decline, with the Nasdaq now trading below its pre-election levels following Trump’s newly implemented tariffs. Effective today, the administration has imposed 25% levies on goods from Mexico and Canada, alongside additional tariffs on Chinese imports.

Crypto markets have also suffered, weighed down by both macroeconomic uncertainty and the bursting of a speculative bubble in memecoins. However, analysts suggest that potential rate cuts could provide relief for digital assets, even as the economy remains far from a return to full-scale quantitative easing.

The Federal Reserve, however, faces a difficult balancing act. While lower rates could help support economic growth and risk assets like crypto, inflation remains a concern. After four consecutive monthly increases, inflation currently sits at 3% year-over-year—still above the Fed’s 2% target, which it last achieved in February 2021.

As policymakers navigate these competing pressures, markets will be watching closely for signals on the Fed’s next move.