In bad news for cryptocurrency bulls, analysts at Dutch bank ING highlighted the potential for a breakout in the 10-year US Treasury yield, currently at 4.09%, in line with CoinDesk’s outlook.
The yield has shown resilience, holding above 4% despite several weak economic readings, including Wednesday’s negative ADP jobs report for November, which marked the third contraction in five months. Higher yields could tighten financial conditions, discourage risk-taking and weigh on riskier assets, including cryptocurrencies.
“Treasurys love that 4% to 4.1% trading range. A temporary break below is more likely. But a break above is more likely,” the bank said in an analyst note to clients on Thursday.
The yield, the US government’s benchmark borrowing cost, fell 2 basis points to 4.06% following the ADP report and then quickly reversed. That was unusual. Weak jobs data and subdued inflation headlines are usually a sign that interest rates are going to lower to boost the economy.
The same applies to the Federal Reserve’s interest rate cut expectations, which have risen to an 87% chance of a reduction this month. However, the 10-year yield has traded between 4% and 4.20% since September, a key point CoinDesk highlighted earlier this week.
ING attributes this rigidity to structural changes in the US economy, where productivity gains partially driven by artificial intelligence are playing a larger role than employment in driving growth.
“Treasury bonds have developed some resilience in the face of the weak employment narrative,” the analysts wrote. “Partly because there are fewer immigrants coming into the country on a net basis, requiring less job creation. But also because productivity growth, rather than job growth, drives things into the future (AI, among others).”
Friday’s personal consumption expenditures (PCE) report could bring volatility to the 10-year yield.
According to ING, a more dovish report could push yields below 4%, but any drop is likely to be temporary. A decisive break above 4.1%, on the other hand, could be more structural and potentially set the tone well into 2026.
