Bitunix Analyst: US Fiscal Deficit Pushes Term Premium Higher, Crypto Market Faces Liquidity Test

Comparatively, the yield on 10-year US bonds once rose to 4.75%, a record high since January 2025, while the 20-year yield rose to about 5.28%. Long-term US bonds continued to be pressured to sell off. The core of this rise in yield is not only the Federal Reserve's short-term interest rate expectations, but the market is re-evaluating America's long-term fiscal deficit, inflation risk, and term premium.

The size of US Treasury bonds is close to 40 trillion dollars, and the fiscal deficit continues to widen, which means that the government must rely on a larger supply of bonds to absorb market capital. When investors require higher yield to take on long-term US debt, the impact is not only on government financing costs, but also on simultaneously increasing capital costs for enterprises, mortgages, and overvalued assets. In other words, rising long-term yield rates are gradually becoming a pricing constraint for the entire financial market.

This is also an important reason why tech stock valuations have come under pressure recently. AI and semiconductor companies still have strong profit growth, but as risk-free interest rates continue to rise and future cash flow discount rates increase simultaneously, valuation premiums for high-growth companies must be recalculated.

The minutes of the July meeting of the Joint Committee are therefore even more important. Three officials supported interest rate hikes at the time, and the market will now look for more signals about inflation, the extent of policy restrictions, and differences within the committee. If the record is hawkish, it will further reinforce the expectation that high interest rates will last for a long time; conversely, if the internal situation continues to wait for more economic data, it may reduce the pressure on short-term interest rates, but it may not immediately resolve the fiscal pricing issue of long-term US bonds.

Changes in global capital costs are also being reflected in Japan and Switzerland. Mizuho believes that the Bank of Japan may raise interest rates in September as soon as possible, or even gradually increase the frequency of interest rate hikes; the normalization of interest rates in Japan means that the cost advantage of the yen as a global financing currency has declined further. In contrast, Switzerland currently maintains zero interest rates, and the Swiss franc may become a new financing currency for some arbitrage transactions. This is not simply a change in exchange rates; global arbitrage funds are re-selecting the cheapest funding source.

For the crypto market, the impact of this environment is more immediate. Although Bitcoin has medium- to long-term demand from ETFs and institutional capital, it is still an asset that is highly sensitive to US dollar liquidity, real interest rates, and risk appetite in the short term. As long-term US bond yields continue to rise and the opportunity cost of global capital increases, highly valued stocks and crypto assets will face higher capital competition.

Therefore, what is currently most noteworthy is not a single interest rate forecast, but rather whether there is a divergence between Fed policy interest rates and long-term US bond yields.