BlockBeats reported on Aug. 24 that a Bitunix analyst sees global financial conditions entering another period of strain as risks from US Treasuries, the yen and trade issues converge.
Minneapolis Federal Reserve President Neel Kashkari said he has not seen signs that the US Treasury market is breaking down. The 10-year Treasury yield is close to 4.7%, and while that level is high, he said it is not historically unusual. On that basis, the Federal Reserve can keep inflation control as its main objective rather than shift policy in response to swings in Treasury yields.
According to the analysis, that means the Fed is still unlikely in the near term to target stability in the long-end bond market even though US government debt has surpassed $40 trillion. The view stands in clear contrast to the Treasury Department’s recent move to expand long-bond buybacks in an effort to reduce financing costs.
The analyst said the Treasury wants to push down long-dated yields, but the Fed has not pledged policy support. As a result, long-end yields are still being driven mainly by inflation expectations, fiscal supply, capital demand linked to AI investment and the term premium. If Treasury intervention cannot keep yields down for long, that could put even more focus on how US fiscal fundamentals are being priced in the bond market.
At the same time, market pricing for a Bank of Japan rate hike on Sept. 18 has climbed to about 82%, up sharply from before the July meeting, while the yen has again approached the 160 level. If BOJ officials send more hawkish signals before the meeting, the yen could strengthen and increase pressure for Japanese capital to flow back home, affecting allocations across global bonds and risk assets.
The note also said the collapse of US-Canada trade talks and higher US tariffs on Canadian goods have brought supply-chain and inflation risks back into focus.
With US fiscal pressure rising, inflation risks tied to energy and trade still in play, and US-Japan monetary policy potentially diverging, the market is no longer focused only on rate-cut expectations. The bigger question is whether global capital costs can remain stable. This week’s Jackson Hole gathering is being watched as a key checkpoint, and comments from Warsh on inflation, long-end yields and the Fed’s policy framework could directly shape pricing in the dollar, Treasuries and risk assets.