BlockBeats report, September 2: Global bond markets are facing pressure from simultaneously high debt levels and high interest rates. The U.S. 10-year Treasury yield has risen to approximately 4.8%, while the 30-year yield remains above 5%. The Treasury’s expanded buyback program has provided limited support, indicating that market concerns extend beyond short-term liquidity to the term premium driven by $40 trillion in debt, massive fiscal deficits, and long-term financing needs.
Fed Chair Powell emphasized at Jackson Hole that PCE inflation remains at 3.7%, and underlying inflation has not improved sufficiently, meaning the Fed "still has work to do." Several officials have recently argued that policy restraint is insufficient, keeping expectations for a September rate hike elevated. This indicates that, even as the economy remains resilient, the Fed has little room to cut rates in the near term.
Notably, the Bank of Japan has also signaled a potential rate hike. Both Kuroda and Takada emphasized upward risks to inflation, and Japan’s 10-year government bond yield has risen to around 3%. If a rate hike is implemented in September, the incentive for Japanese capital to flow back home will further increase, potentially exerting spillover pressure on U.S. Treasuries through global bond allocations.
Therefore, global assets are currently facing not a single central bank policy, but an environment characterized by U.S. fiscal deficits, Japan’s monetary normalization, and synchronously elevated real interest rates worldwide. For gold, high yields continue to pose short-term pressure; however, if long-term rate increases stem primarily from fiscal risks and term premiums rather than robust economic strength, gold’s value as a hedge against credit and fiscal risks may further increase. In contrast, cryptocurrencies still require improved U.S. dollar liquidity and a rebound in risk appetite to more easily overcome the valuation pressures brought on by high interest rates.
The key market focus moving forward remains U.S. employment, inflation, and long-term yields. If data sufficiently supports expectations of rate hikes, U.S. Treasuries and high-valuation assets will continue to face pressure; if economic data shows clear signs of cooling, a decline in long-term yields could once again unlock liquidity for equities, gold, and crypto markets. What truly needs to be monitored in September is whether high interest rates stem from monetary tightening—or are evolving into a long-term structural trend driven by fiscal policy and global supply and demand for capital.