The US 10-year Treasury yield rose above 5% for the first time this cycle, settling at 5.08% as the Fed's 25-basis-point hike to 3.75%-4% and a dot plot showing 16 of 18 officials expecting another increase forced traders to reprice the terminal rate. The Nasdaq Composite fell 0.95% to 26,986.44 as higher discount rates compressed long-duration growth valuations, while Bitcoin faced the same rate-driven pressure.
The 10-year Treasury yield climbed above 5% for the first time in this cycle, a move that raises the risk-free discount rate applied to every long-duration asset and pushed the Nasdaq Composite down 0.95% to 26,986.44.
The benchmark yield settled at 5.08%, up 2.21% on the session, according to Seeking Alpha data, while the 2-year note — the maturity most sensitive to Federal Reserve policy — rose 2.82% to 4.89%. The 30-year reached 5.38% and the 5-year 4.96%, leaving the entire curve above 4.8%.
The repricing follows the Fed's decision to raise its benchmark rate by 25 basis points to a target range of 3.75%-4%, the first increase since July 2023. Chair Kevin Warsh told reporters that inflation has been "too high ... for too long," adding that the Federal Open Market Committee had decided "this standard has not been satisfied."
The dot plot — the individual rate projections submitted by each Fed official — showed 16 of the 18 participants expecting at least one more increase this year, with four seeing two. That guidance, rather than the hike itself, is what lifted the long end: traders who had positioned for a pause into year-end were forced to reprice the terminal rate higher.
"The bond market's biggest moves are likely now in the rearview mirror," said Bob Edwards, chief investment officer at Florida-based Edwards Asset Management, in a note. "There is now a good opportunity for investors after this big move to lock-in these elevated yields." Edwards added that any further increase would most likely arrive at the December meeting, since the Fed is unlikely to move at its October gathering, which falls days before the midterm elections.
The move was not linear. Yields slid on Thursday, with the 10-year falling more than 7 basis points to 4.93% and the 2-year slipping more than 5 basis points to 4.67%, before Friday's rebound erased that retreat. Weekly jobless claims for the period ended Sept. 12 came in at 196,000, below the 207,000 economists polled by Dow Jones had expected — a reading that argued against an imminent policy pivot and helped cap the bond bid.
For equities, the arithmetic is mechanical. A higher risk-free rate lowers the present value of every future cash flow, and the effect scales with how far out those cash flows sit. That is why the Nasdaq Composite's 0.95% decline outpaced the broader market: software, semiconductor and artificial intelligence names carry the longest duration in the index, and their valuations rest on earnings projected years into the future.
The same discount-rate logic reaches Bitcoin, which trades as the longest-duration asset in the market — it produces no cash flow at all, so its price is entirely a function of the rate used to discount the future. Rising Treasury yields pull capital toward fixed income by making a risk-free 5.08% return available, and they tighten the financial conditions that speculative assets depend on. The pressure is a function of the yield level, not of anything specific to crypto.
The cross-asset chain runs in one direction: Fed guidance lifts the front end, the front end drags the long end higher, the long end compresses equity multiples, and the same rate move draws capital out of speculative assets. Each link is a repricing of the same variable.
The immediate question is whether 5.08% holds. The 10-year has now retraced a pullback to 4.93% within two sessions, and the speed of that reversal suggests sellers remain in control of the long end. A sustained break above 5.1% would put the next leg of equity multiple compression in play; a failure to hold would mark the new high as a spike rather than a regime change.
The catalyst that resolves it is the Fed's next meeting. With 16 of 18 officials projecting another increase and four open to two, the burden of proof sits with the data. Warsh's framing — that the committee needs confidence inflation is "moving to our objective clearly and at sufficient speed" — leaves little room for a pause unless the incoming prints soften materially.
Political pressure adds a variable the bond market has historically priced with a discount. President Donald Trump said in a social media post that rates "should be 1 per cent, or less, because we are the best credit in the world," and told reporters the Fed's board is "very hostile ... very political" and "doing the wrong thing." The last time a sitting president campaigned this openly against Fed policy, the market's response was measured in term premium rather than in the policy path — a distinction that matters for anyone holding duration.
For portfolio positioning, the practical implication is that the discount rate is now the dominant input across asset classes, and it is set by a committee that has signaled it is not finished. Tech exposure and Bitcoin exposure are, for now, the same trade expressed twice.
This article is for informational purposes only and does not constitute investment advice.
