Treasury Yields Fall as Trump Administration Signals Rate Cuts, Crypto Investors Take Note
U.S. Treasury Secretary Scott Bessent reaffirmed the Trump administration’s commitment to lowering interest rates on Tuesday morning, a shift that could have major implications for financial markets, including crypto.
The cryptocurrency market has already been struggling in recent weeks, first due to the bursting of a speculative memecoin bubble and now from broader economic uncertainty. Traditional markets have also been hit hard, with major U.S. stock indexes retreating sharply following a series of tariff escalations by President Trump. The tariffs—25% levies on goods from Mexico and Canada, along with additional taxes on Chinese imports—officially took effect today.
The Nasdaq, which fell another 2.6% on Monday and opened lower again Tuesday, has now dropped below its pre-election levels from November, erasing all post-election gains.
Lower Rates on the Horizon?
“We’re set on bringing interest rates down,” Bessent said in a Fox News interview Tuesday morning, reinforcing expectations for policy shifts aimed at easing financial conditions.
Yields on the 10-year U.S. Treasury note have already dropped to 4.13%, down from 4.80% just before Trump’s inauguration six weeks ago.
At the short end of the curve, rate expectations are shifting rapidly. According to the CME FedWatch Tool, markets are now pricing in a 47% chance of at least one Federal Reserve rate cut by May, up from just 26% a week ago. The likelihood of two or more cuts by June has surged to 36%, up from 15% a week prior.
Crypto analysts have taken note, with Crypto Daybook Americas suggesting that easing monetary policy could provide some relief for digital assets. However, the economy remains far from a return to aggressive quantitative easing.
The Fed’s Balancing Act
While lower rates could help stabilize markets, the Federal Reserve must balance economic risks with inflation, which remains elevated at 3% year-over-year after four consecutive months of increases. The last time inflation was at or below the Fed’s 2% target was in February 2021.
The central bank faces a tough challenge: cutting rates to prevent a recession while avoiding policies that could reignite inflationary pressures. For now, markets—and crypto investors—are watching closely.
