Warsh's Inflation Warning Sends Yields Soaring, Bitcoin Holds Firm
US Treasury yields surged after Federal Reserve Chair Kevin Warsh emphasized that inflation remains the Fed's top priority, signaling potential further tightening of monetary policy. In his August 28 speech at Jackson Hole, Warsh noted that the PCE inflation measure was running at 3.7% over 12 months and 4.1% over six months, with unemployment remaining at 4.1%. He stressed that policymakers need confidence that underlying inflation is moving toward the 2% target 'clearly and at sufficient speed.'
Markets responded to Warsh's comments by increasing expectations for another rate increase, with Reuters reporting a rise in the probability of a September hike from about 35% to 60%. The US 2-year Treasury yield jumped sharply, reaching a one-month high.
Meanwhile, Bitcoin has held its ground near $78,000 despite rising Treasury yields. However, momentum has cooled substantially after BTC's strong August advance. The four-hour chart shows that Bitcoin is trading above its 50-period EMA at approximately $77,095, but the RSI sits near 49.7 in neutral territory.
The technical structure remains more constructive than the recent pullback suggests, with Bitcoin continuing to trade well above the rising trend support drawn from the mid-August breakout area. However, losing the $77,000 area and the 50-EMA would weaken the setup and increase the probability of a deeper correction toward the rising trendline below current prices.
The macro risk is that Treasury yields remain elevated or continue higher, which could increase competition for speculative assets such as Bitcoin and tighten financial conditions.