The Federal Reserve's third rate cut of the year was just announced, but the market has staged a satirical show. With a 25 basis point cut implemented, the 10-year U.S. Treasury yield instead surged straight up to 4.2%. This result left many puzzled—how can a rate cut lead to rising yields? The answer lies in the Fed's forward guidance: only a further 25 basis point cut is planned for 2026, with adjustments not resuming until 2027. This is hardly an easing policy; it's a hawkish move disguised as a rate cut.

The political tension is also intensifying. Trump openly criticized Powell as "slow to act," advocating for doubling the rate cut and making U.S. interest rates the lowest in the world. He even revisited old issues, mentioning the overspending on the Fed building renovation, implying clearly—if rates aren't cut significantly before his term ends in 5 months, things won't be easy.

Powell's situation is quite awkward. For the first time in six years, the Fed's internal voting resulted in three dissenting votes (9 in favor, 3 against), reflecting deep disagreements among policymakers over the pace of rate cuts. Meanwhile, they must also contend with pressure from the White House and watch out for warning signals from the bond market—if the central bank's independence is compromised, long-term yields could spike to 4.5%, and the combined impact of sticky inflation and risk premiums could plunge the market into turmoil.

The logic behind the abnormal rise in U.S. Treasury yields is also worth pondering. Market expectations for rate cuts had long been priced in, and after the decision was announced, investors rushed to cash out. Coupled with ongoing concerns over fiscal deficits and inflation rebound, this led to the classic "buy the rumor, sell the fact" scenario—yields didn't fall but instead rose.

These changes have a significant impact on the crypto market. Fluctuations in Treasury yields directly influence risk asset pricing and determine capital flows between different asset classes. When Treasury yields are high, risk assets often face pressure.

The question now becomes more acute: if Powell indeed steps down in 2026, will his successor launch large-scale easing? Where exactly is the ceiling for U.S. Treasury yields? These uncertainties are increasingly becoming the new focus of market attention.