Treasury yields swell, equities and crypto dip while markets factor in four rate hikes in 2022

Treasury yields swell, equities and crypto dip while markets factor in four rate hikes in 2022
Image Source: Ivan Radic

New Delhi(CoinChapter.com): A global bond sell-off sparked on Tuesday as investors reaffirm their bets on monetary tightening by the Federal Reserve. Financial markets for the first time priced in four interest rate increases by the US central bank this year. The yield on the two-year Treasury note, which resonates with interest rate expectations, rose 0.07 percentage points to 1.04 percent. On the other hand, while S&P and NASDAQ dropped 1.2% and 1.8% respectively, the global crypto market cap traded more than 2 percent lower at $2.02 trillion compared to the last day.

Bond prices fall amidst lucrative rates on cash deposits  

The yield on the 10-year US Treasury note, which rises as the price of the bonds goes down with an imminent rise in interest rates, climbed 0.05 percentage points to 1.82 percent. The prospects of higher rates on cash deposits and sustained inflation made the security’s fixed-interest payments less appealing.

crypto dip, Treasury yields swell, equities and crypto dip while markets factor in four rate hikes in 2022
Image Source: Tradingview US Treasury 10 Yr Bond Yield rose on Tuesday
US Treasury 2 Yr Bond Yield rose on Tuesday
Image Source: Tradingview US Treasury 2 Yr Bond Yield rose on Tuesday

Bitcoin drops 1.3% with tepid trade volumes

BTC/USD traded 1.3% down on Tuesday
Image Source: Tradingview BTC/USD traded 1.3% down on Tuesday

Crypto prices dipped on Tuesday. Barring Cardano, which rose more than 7% all other altcoins fell in tandem with the numero uno digital currency. Bitcoin(BTC) fell below the $42,000 mark whereas Ethereum slipped below $3,200 levels, marking a 3.6% dip. Trading was light as investors looked for signs that Bitcoin’s downward spiral has reached an inflection point. However, the total crypto market volumes jumped by 20 percent to $77.26 billion.

Coinmarketcap  Price movements of top 8 Cryptocurrencies by market cap on 18th Jan 2022
Image Source: Coinmarketcap  Price movements of top 8 Cryptocurrencies by market cap on 18th Jan 2022

Hawkish FED while Omicron led global supply chain jitters cast concerns

“There’s speculation about increasing aggression from the Fed,” said James Athey, portfolio manager at Aberdeen Standard Investments. The U.S. central bank has pegged its main funds’ rate close to zero since March 2020, however, the interest rate futures contracts show traders expect it to exceed 1 percent by December.

New fears of prolonged price rises caused by supply chain bottlenecks have emerged after authorities in China, reacted to the spread of the Omicron coronavirus variant with fresh lockdowns and travel controls.

“That now is starting to cause some concern on the supply chain crunch,” said Randeep Somel, portfolio manager at M&G. “It could go the other way just at the point a lot of western economies are going to go full throttle and reopen everything again.”

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crypto dip, Treasury yields swell, equities and crypto dip while markets factor in four rate hikes in 2022

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