In bad news for crypto bulls, analysts at Dutch bank ING highlighted breakout potential in the 10-year US Treasury yield, currently 4.09%, in line with CoinDesk’s outlook.
Rates have shown resilience, holding above 4% despite several soft economic readings, including Wednesday’s negative ADP employment report for November, which marked the third decline in five months. A higher return could tighten financial conditions, discourage risk-taking and weigh on riskier assets, including cryptocurrencies.
“Treasuries love the 4% to 4.1% trading range. Temporary break below more likely. But break over has more legs,” the bank said in an analyst note to clients on Thursday.
The yield, the U.S. government’s benchmark borrowing cost, fell 2 basis points to 4.06% after the ADP report and then quickly reversed. It was unusual. Weak labor market data and muted inflation headlines are usually a signal that interest rates are on the way down to jumpstart the economy.
The same goes for Federal Reserve rate cut expectations, which have risen to an 87% chance of a reduction this month. Still, the 10-year yield has traded between 4% and 4.20% since September, a key point CoinDesk highlighted earlier this week.
ING attributes this stickiness to structural shifts in the US economy, with productivity gains driven in part by artificial intelligence playing a bigger role than employment in driving growth.
“Treasuries have built some resilience against the weak jobs narrative,” the analysts wrote. “Partly because there are net fewer immigrants to the country, which requires less job creation. But also because productivity growth rather than employment growth drives things into the future (including AI).”
Friday’s personal consumption expenditures (PCE) report could generate volatility in the 10-year yield.
According to ING, a softer report could send rates below 4%, but a drop is likely to be temporary. A decisive break above 4.1%, on the other hand, could be more structural and potentially set the tone well into 2026.
