Bitcoin reached a new record high of $109,888 amid a weak US 20-year Treasury auction that led to a drop in US stocks. The yield on 20-year notes hit 5.1% due to lesser-than-expected demand, while yields for 30-year and 10-year notes also rose. This came shortly after Moody’s downgraded the US credit rating from triple-A to Aa1. The S&P 500 fell by 1.2%, and the Nasdaq Composite dipped by 1.4%, erasing earlier gains. Surprisingly, bitcoin increased in value despite rising bond yields, often associated with risk-off sentiment. Analysts have noted potential concerns about a bond market ‘event’ driven by Japanese yields hitting record highs. Market dynamics appear to reflect a tightening bond market dissimilar to typical asset behavior, complicating forecasts for risk assets like the S&P 500, where earnings growth projections have significantly lowered. Tomorrow's initial jobless claims could provide further insight into the labor market amidst these developments.

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