Benjamin Cowen Predicts 10-Year Yield Peak Before Midterms, Bitcoin May Rally

According to analyst Benjamin Cowen, the 10-year Treasury yield, which hit 5.342% on October 1, should reach a peak before mid-November. That would potentially relieve pressure on Bitcoin (BTC) and other risk assets.

The yield level was the highest since early 2002. Around the same time, the Federal Reserve (Fed) hiked rates in September.

Why Does Cowen Expect a Yield Peak Around the Fed Meeting?

Cowen pointed to historical precedent for his timing. In the last two midterm election years (2018 and 2022), the 10-year yield topped out between early October and mid-November.

In both those years, yields declined from mid-November into December. Cowen admitted, though, that the pattern isn't precise.

Cowen previously marked 5% as a soft target. The yield has since exceeded that, and he now says 5.4% to 5.6% is still possible.

Cowen anticipates maximum fear around the Fed's October 28 meeting. He noted that the probability of an October rate hike dropped from 64% to 17.7% within a week.

In Cowen's view, that decline in odds is part of the issue. He contends that yields are rising partly because bond traders worry the Fed will not tighten enough.

According to Cowen, the Fed can find reasons to pause by pointing to subdued inflation and a weak labor market. The September jobs report was weak, showing just 29,000 new jobs.

Cowen stated that a poor inflation report might still spark one final bond selloff. If the two-year yield subsequently declines, the Fed might not need to raise rates as aggressively.

Rates are expected to begin declining in mid-November, soon after the midterm elections.

Would a Yield Decline Help Bitcoin?

Cowen did not specifically refer to Bitcoin. He merely stated that the trajectory of rates should influence risk assets.

Nonetheless, Bitcoin has shown sensitivity to yields recently. It contended with 24-year-high yields last week, then jumped within minutes of the jobs report.

According to CoinGlass, short sellers lost roughly $27.5 million within an hour of the release. The weak hiring figures may have calmed concerns about additional Fed tightening.

A localized peak might only bring modest relief. Cowen continues to anticipate that long-term rates will rise over the coming 10 to 20 years. That trend could maintain pressure on non-yielding assets like Bitcoin.