Recently, the US bond market has experienced intense fluctuations, with the two-year Treasury yield once soaring to 3.61%, hitting a new high since the Federal Reserve's last rate cut in December. Market concerns stem from the latest signals from the White House regarding the leadership transition at the Federal Reserve—reports suggest that the new nominee may differ from market expectations.

This wave of change has had an immediate impact. Data from exchange-traded futures show that the market's expectations for two 25 basis point rate cuts in 2026 have been significantly revised downward. More painfully, Wall Street institutions that previously strongly believed in a rate cut at the upcoming January 28 meeting have now collectively changed their stance. The latest attitude from Morgan economists is: regardless of who takes over as Fed Chair, there is little room left for further rate cuts.

There is also an invisible driving force behind this—December employment data. After its release, this data has been weighing heavily on the bond market. Many analysts openly state that the current market pricing already reflects the possibility of the Fed shifting from dovish to hawkish.

John Fath, partner at BTG Pactual Asset Management, pointedly said: "Earlier, everyone's trading logic was simple—whoever becomes Chair would lean dovish. But in the past few days, this consensus has completely reversed." In other words, the market is shifting from betting on rate cuts to a new expectation that "interest rates may stay high." For the crypto market, this change in rate expectations often signals the beginning of risk asset re-pricing.