Three Fed officials underscore ongoing inflation battle; Williams rules out 2027 hike
Three Fed officials stress inflation fight continues; Williams sees no 2027 hike, while Barkin and Collins back further rate increase.
A strategist warns that 20-year Treasury yields hitting 6% could trigger a $110 billion bond selloff, affecting stocks and Bitcoin.
The next downturn on Wall Street may originate in bonds. Strategist Harley Bassman has cautioned that a rise in 20-year US Treasury yields to 6% could activate trading rules, resulting in selling pressure comparable to $110 billion in bond sales.
Equities and Bitcoin could be affected as investors rotate into safer government debt.
The 20-year yield was around 5.68% in Bassman's October 13 report, only 0.32 percentage points below his threshold.
The issue concerns roughly $200 billion in Treasury futures. These contracts allow sellers to pick which bonds to deliver. As yields increase, longer-dated bonds may become the cheapest option. They also decline more in value when rates rise.
Managers trying to manage their exposure might then sell or hedge more bonds, pushing prices lower and yields higher.
Bassman estimated:
“such a delivery switch would be equivalent to the Treasury auctioning $110bn 20yr bonds over the course of four months,”
That figure represents possible market pressure, not confirmed sales.
BOND EXPERT WARNS OF $110 BILLION SELLING SHOCK IF TREASURY YIELDS HIT 6%
Veteran bond strategist Harley Bassman warns of a “nightmare scenario” in U.S. Treasuries.
If the 20-year Treasury yield rises above 6%, futures-related hedging could trigger selling pressure equivalent…— *Walter Bloomberg (@DeItaone) October 13, 2026
Higher Treasury yields provide investors with more income from government debt and make borrowing more expensive for companies. Both factors can weigh on stocks, particularly costly technology shares.
Bank of America's survey flagged another level: 5.9% on the 10-year Treasury would lead managers to prefer bonds over equities. On Tuesday, it stood at 5.22%.
Bitcoin was trading near $83,014 on Tuesday. Climbing yields can draw investors away from riskier assets, putting pressure on crypto. Bitunix has already connected recent weakness in crypto to rising US borrowing costs.
Neither threshold guarantees a crash. However, a sharp rise in yields could affect both markets before those levels are reached.
Bassman sees a deeper issue in Washington's 6.2% fiscal deficit:
“…we have a problem of “Trust”, not inflation,”
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Three Fed officials stress inflation fight continues; Williams sees no 2027 hike, while Barkin and Collins back further rate increase.
Dollar weakened ahead of U.S. CPI, Treasury yields eased, stocks slipped and oil rose on Middle East worries.
Boston Fed President Susan Collins said uncertainty is high and she is watching how broad inflation pressures are before the next rate decision.
China is due to publish September CPI and PPI on Wednesday; August consumer prices rose 0.8% on the year and producer prices climbed 3.8%.