BlockBeats News, August 19th. The yield on the U.S. 10-year Treasury note rose to 4.75% at one point, hitting a new high since January 2025, while the 20-year yield rose to around 5.28%. The long-end Treasuries continued to face selling pressure. The core reason for this yield increase is no longer just the market's expectations of the Fed's short-term interest rates, but the market is reassessing the U.S.'s long-term fiscal deficit, inflation risks, and term premium.

The scale of the U.S. national debt has approached $40 trillion, and the fiscal deficit continues to expand, meaning the government must rely on a larger-scale bond supply to absorb market funds. When investors demand a higher yield to take on long-term U.S. debt, it not only impacts the government's financing costs but also simultaneously raises the capital costs for corporations, mortgages, and high-valuation assets. In other words, the rise in long-term yields is gradually becoming a pricing constraint for the entire financial market.

This is also a key reason for the recent pressure on tech stock valuations. AI and semiconductor companies still have strong earnings growth, but as risk-free rates continue to rise, the discount rate for future cash flows also increases, forcing a reassessment of the valuation premium for high-growth companies.

The minutes of the Fed's July meeting are therefore more important. Three officials had already supported a rate hike at that time, and the market is now looking for more signals about inflation, the extent of policy constraints, and internal committee divergences. If the minutes lean hawkish, it will further reinforce expectations for a longer period of high rates; conversely, if there is still a focus on waiting for more economic data within the committee, it may reduce pressure on short-term rates but may not immediately resolve the fiscal pricing problem for long-term Treasuries.

The global cost of funds is also being reflected in Japan and Switzerland. Mizuho believes that the Bank of Japan may hike rates as early as September, even gradually increasing the frequency of rate hikes. The normalization of Japanese rates means that the cost advantage of the Japanese yen as a global financing currency will further decline. In comparison, Switzerland currently maintains a zero interest rate, and the Swiss franc may become a new financing currency for some arbitrage trades. This is not just a simple exchange rate change but a scenario where global arbitrage funds are reselecting the "cheapest source of funds."

For the crypto market, the impact of this environment is more direct. Although Bitcoin has long-term demand from ETFs and institutional funds, it remains an asset highly sensitive to U.S. dollar liquidity, real interest rates, and risk appetite in the short term. As the yield on long-term Treasuries continues to rise, the opportunity cost of global funds increases, putting high-valuation stocks and crypto assets in a situation of higher capital competition.

Therefore, the most critical issue to monitor at the moment is not just a single rate expectation but whether there is a dislocation between the "Fed policy rate" and the "long-term Treasury yield."