"Surging U.S. Treasury yields emerge as a key variable…Prolonged war could amplify Bitcoin volatility"

As fallout from the Middle East conflict puts upward pressure on U.S. Treasury yields, an analysis suggests the bond market could influence President Trump’s war strategy and Bitcoin’s trajectory.

According to cryptocurrency-focused media outlet CoinDesk on the 24th, U.S. Treasury yields have climbed to their highest levels in months since the Iran war, reflecting delayed expectations for rate cuts and rising inflation expectations. The bond market is a core gauge of the global financial system, and assessments indicate that if yields rise beyond a certain level, they could also affect policy decisions.

Padraic Garvey, head of ING Americas Research, said, "If the 10-year swap spread rises above 60bp, it could create enough strain to affect the course of the war," adding, "It is currently below 50bp, but if it breaks above 60bp, a loss of confidence in Treasuries and higher funding costs could emerge at the same time." He went on to explain that "a widening spread is not merely a matter of perception, but a factor that raises the U.S. government’s debt funding costs."

The Kobeissi Letter said, "The 4.5~4.6% range for the 10-year yield is an inflection point that could prompt a policy response," adding that "if it moves above that range, the likelihood of policy changes could increase."

In fact, when yields topped 4.5% in April last year, President Trump temporarily eased tariff policy. The Kobeissi Letter explained that "when yields broke above 4.6% at the time, reciprocal tariffs were deferred for 90 days."

Markets are increasingly expecting that if yields rise further, pressure could broaden across risk assets. Arthur Hayes, co-founder of BitMEX, said, "If the 10-year yield rises above 5%, it could trigger a mini financial crisis," adding that "the U.S. Federal Reserve (Fed) may move to provide liquidity."