Analyst Benjamin Cowen expects the 10-year Treasury yield to peak before mid-November, after it touched 5.342% on October 1. That could ease pressure on Bitcoin (BTC) and other risk assets.
The reading was the highest since early 2002. Meanwhile, the Federal Reserve (Fed) raised interest rates in September.
Why Does Benjamin Cowen See a Yield Peak Around the Fed Meeting?
Cowen said history supports his timing. Historically, the 10-year yield topped between early October and mid-November in 2018 and 2022, the last two midterm election years.
Yields then fell from mid-November through December in both years. However, Cowen concedes the pattern is not exact.
He had flagged 5% as a soft target. It has since overshot that level, and he says 5.4% to 5.6% remains possible.
He expects peak fear around the Fed’s October 28 meeting. Cowen said the odds of an October hike fell from 64% to 17.7% in a week.
In his reading, that drop is part of the problem. He argues yields are climbing partly because bond traders fear the Fed will tighten too little.
Cowen says the Fed can justify holding off by citing soft inflation and a soft labor market. The weak September jobs report showed just 29,000 new jobs.
A bad inflation report could still trigger one last bond selloff, he said. If the two-year yield then falls, the Fed may not need to hike as much.
He expects rates to start falling in mid-November, shortly after the midterms.
Would Falling Yields Help BTC?
Cowen did not mention Bitcoin directly. He said only that the rate path should affect risk assets.
Bitcoin has reacted to yields recently, though. It battled 24-year-high yields last week, then jumped within minutes of the jobs report.
Short sellers lost about $27.5 million in an hour after the release, CoinGlass data shows. Weak hiring data may have eased fears of further Fed hikes.
Even a local peak may bring limited relief. Cowen still expects long-term rates to climb over the next 10 to 20 years. That could keep pressure on assets that pay no yield, such as Bitcoin.
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