The U.S. Federal Reserve sent a hawkish signal after cutting interest rates by a quarter today, indicating that the number of rate cuts next year has been halved to only 2 times, leading to a significant rise in U.S. Treasury yields. The 10-year Treasury yield broke above 4.5%, reaching a new high in 7 months. (Background: Bitcoin plummeted by $100,000, Ethereum fell below $3650, Powell: The Fed is not allowed to hold Bitcoin) (Additional context: A double whammy for stocks and cryptocurrencies! The Fed is expected to cut rates only 2 times next year, Tesla plunged 8%, and the U.S. stock market plummeted.) The U.S. Federal Reserve announced its interest rate decision today (19th) at 3 AM, cutting rates by 1 quarter as expected, bringing the benchmark rate down to 4.25%–4.5%. This is the third consecutive rate cut since initiating a 2 quarter cut in September. However, the latest dot plot indicates that the number of rate cuts in 2025 has been reduced from 4 times in September to the current '2 times', with the long-term median federal funds rate raised to 3%. Additionally, Fed Chair Powell sent a hawkish signal after the meeting, stating that inflationary pressures remain sticky, and the Fed will be 'more cautious in cutting rates,' which dampened investor sentiment, resulting in a plunge in U.S. stocks and Bitcoin falling below $100,000. The 10-year U.S. Treasury yield reached a new high in 7 months, triggering a sharp drop in U.S. Treasury prices. The U.S. Treasury yield significantly rose, with the 10-year Treasury yield, seen as the 'anchor for global asset pricing,' exceeding 4.52%, surging by 13 basis points intraday, reaching its highest level since the end of May; the 2-year Treasury yield also surged over 11 basis points to 4.35%, marking a new high since November 22. The U.S. Dollar Index closed at its highest point since 2022, surpassing 108. Source: Financial M Square. The Fed has defined a 'gradual rate cut'; FedWatch estimates only one rate cut next year. With the Fed's latest dot plot, it forecasts only 2 rate cuts in 2025, 2 in 2026, and 1 in 2027, lowering the benchmark rate to a neutral rate of 3% (neither stimulating nor restricting economic expansion) in 3 years. This implies that the pace of interest rate cuts will significantly slow down, with cuts less than previously expected. Source: Fed. The CME FedWatch tool shows that traders have aligned with the Fed's latest forecasts, now betting that the Fed will only cut rates once next year, and may pause rate cuts until June, whereas previously their bets concentrated on 3 rate cuts in 2025. Source: CME FedWatch tool. The 10-year U.S. Treasury yield may rise to 6%. Since the Federal Reserve's policy rate is a key factor for U.S. Treasury yields, when the Fed's latest forecast dampened traders' expectations for more rate cuts, both short-term and long-term U.S. Treasury yields, which are quite sensitive to policy rates, saw significant increases of over 10 basis points. Moreover, most Fed officials have revised next year's economic growth rate upwards by 0.1%, the unemployment rate downwards by 0.1%, and inflation rate upwards by 0.3%. Coupled with market estimates that Trump's tax and immigration policies after he takes office may significantly push inflation up, and the continuously growing U.S. fiscal deficit may also keep driving up the 10-year Treasury yield. Bloomberg reports that T. Rowe Price, a top U.S. asset management company, in its latest report estimates that as the U.S. fiscal predicament worsens and Trump's policies lead to rising inflation, the 10-year Treasury yield may first reach 5% in the first quarter of 2025, and then further rise to 6%, setting a new high in over 20 years. The 'new bond king': Gold and Bitcoin will both be range-bound in the short term. According to news from the Xin Bao Financial, Jeffrey Gundlach, known as the 'new bond king' and CEO of DoubleLine Capital, stated in an interview with CNBC today that he believes the maximum the Fed will cut rates next year is 'two times', with a very low probability of another cut in January, and if energy prices surge significantly, further cuts may not be possible next year. He also pointed out that there is significant uncertainty regarding U.S. inflation, fiscal deficit, and the economy, making it unlikely for the Fed to achieve its 2% inflation target next year. Additionally, he believes that market positions in gold and Bitcoin may continue to increase, with both expected to be range-bound in the short term. He noted that he would never hold Bitcoin before Trump takes office. Related reports: U.S. think tank: Bitcoin strategic reserves 'cannot solve the U.S. debt crisis.' Bitcoin isn't that magical... Who is frantically dumping U.S. debt? Japan sold $61.9 billion in Q3, creating a historical high, while China has reduced its holdings for three consecutive months... Has the bottom been reached? Will U.S. debt plummet again if Trump wins? Analysts say: both bullish and bearish factors coexist, and uncertainty deepens. 'The 10-year U.S. Treasury yield breaks above 4.5%! The new bond king: I won't buy Bitcoin before Trump takes office.' This article was first published on BlockTempo (the most influential blockchain news media).

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