Darkfost2026-07-30

Fed stays on hold while yields signal a confidence crisis in US debt

Yesterday the Fed decided once again to hold rates at 3.5%-3.75% after a vote of 9 in favor and 3 against, so this was not a consensus. This is the longest pause since the 2008 crisis. During the press conference a fairly hawkish tone was used and it was confirmed that the 2% inflation target remains the only target to reach. Yet the Fed decided not to act even though inflation remains much higher. This development was received quite poorly by the bond market, and in particular long rates climbed higher. The 10 year T-Note reached 4.7% and the 30 year surpassed 5.2%, a record since 2007. The tightening of monetary conditions continues and this dynamic reflects investors’ loss of confidence. That is to say, investors in US debt, institutions, governments, do not trust the U.S.’s ability to control inflation and its deficit, and holding this debt currently seems riskier to them. For a risk asset like Bitcoin, this vice tightening liquidity even further is not a positive development, especially with the dollar mechanically strengthening at the same time. Bitcoin had never faced rates this globally high during its other cycles, while the need for liquidity keeps growing as its market cap continues to climb. For now the situation is therefore not very favorable, but it is nonetheless reaching extremes today, which will push the Fed to act if it doesn’t want to lose control and investors’ confidence.