It’s bad news for cryptocurrency bulls, with analysts at Dutch bank ING highlighting breakout potential for the 10-year U.S. Treasury yield, currently at 4.09%, in line with CoinDesk’s outlook.
Yields showed resilience and remained above 4% despite weak economic data, including Wednesday’s negative ADP employment report for November, which marked the third contraction in five months. Higher yields could tighten financial conditions, curb risk-taking behavior and put pressure on riskier assets, including cryptocurrencies.
“Treasuries like a 4% to 4.1% trading range. A temporary break below that range is more likely. But a breakout of that range is more likely,” the bank said in an analyst note to clients Thursday.
After the ADP report was released, the U.S. government’s benchmark borrowing cost yield fell 2 basis points to 4.06%, and then quickly reversed. This is very unusual. Weak labor data and sluggish inflation headlines are usually signals for interest rates to be lowered to shore up the economy.
The same goes for expectations of a rate cut by the Federal Reserve, with the probability of a rate cut this month having surged to 87%. However, the 10-year Treasury yield has fluctuated between 4% and 4.20% since September, a key point CoinDesk highlighted earlier this week.
ING attributes this stickiness to structural shifts in the U.S. economy, in which growth is driven in part by productivity gains from artificial intelligence, which plays a larger role in driving growth than employment.
“Treasuries have built some resilience to weaker employment,” the analysts wrote. “Partly because, on a net basis, fewer immigrants are coming into the country, requiring fewer jobs to be created. But also because productivity growth, not employment growth, drives future developments (artificial intelligence, etc.).”
Friday’s personal consumption expenditures (PCE) report could cause volatility in the 10-year Treasury yield.
According to ING, a weaker report could push yields below 4%, but any decline is likely to be temporary. On the other hand, a decisive break above 4.1% could be more structural and could set the tone for 2026.
