Treasury Yields Slide as Trump Administration Pushes for Rate Cuts, Crypto Eyes Relief

U.S. Treasury Secretary Scott Bessent reaffirmed Tuesday that the Trump administration is committed to lowering interest rates, signaling a potential shift in monetary policy that could impact both traditional and crypto markets.

The crypto sector has faced relentless pressure in recent weeks, first from a speculative memecoin collapse and now from broader market turmoil. Equities have also been in retreat, driven by escalating trade tensions. President Trump’s 25% tariffs on imports from Mexico and Canada took effect today, alongside additional levies on Chinese goods, triggering further risk-off sentiment.

The Nasdaq, down another 2.6% on Monday and sliding in early Tuesday trading, has now fallen below levels last seen before Trump’s election victory in November.

Rate Cut Expectations Surge

“We’re set on bringing interest rates down,” Bessent said in an interview with Fox News, reinforcing expectations for easier monetary policy.

The 10-year Treasury yield has plunged to 4.13%, down from 4.80% just prior to Trump’s inauguration six weeks ago. Meanwhile, short-term interest rate expectations are shifting rapidly. The CME FedWatch Tool now places a 47% probability of at least one Federal Reserve rate cut by May, up from 26% a week ago. The odds of two or more cuts by June have climbed to 36%, up from 15%.

Crypto analysts suggest that a looser monetary stance could offer relief to struggling digital assets. However, any major policy shift remains contingent on inflation trends.

The Fed’s Dilemma

Lower rates could provide a lifeline to financial markets, but inflation remains a key concern. Year-over-year inflation sits at 3%, marking four consecutive months of increases. The last time it was at or below the Fed’s 2% target was in February 2021.

The Federal Reserve faces a difficult balancing act—reducing rates to support economic growth while ensuring inflation doesn’t spiral out of control. For now, both Wall Street and crypto markets are bracing for the next move.