Since Moody's downgraded the U.S. sovereign credit rating last Friday, the global bond market has continued to be turbulent, with market sentiment tense and investors focusing on various bond dynamics.

U.S. Treasury auction: Market nerves are tense.

The U.S. Treasury plans to announce the results of a $16 billion 20-year Treasury auction after 1 PM Eastern Time on Wednesday. This is the first long-term bond auction conducted by the U.S. Treasury since Moody's became the last major rating agency to downgrade the U.S. from its highest AAA credit rating, and it is highly anticipated. Brian Quigley, a senior portfolio manager at Vanguard Investments, stated, 'Every Treasury auction now feels like a must-watch event,' as both the 20-year and 30-year Treasury yields are currently close to 5%, and the results of this auction will be an important indicator of the demand for longer-term U.S. bonds. Tom di Galoma, managing director of Mischler Financial Group, also noted that this coupon-bearing Treasury auction is likely to attract significant attention.

In addition to tonight's 20-year U.S. Treasury auction, the U.S. Treasury will also conduct an $18 billion 10-year TIPS auction on Thursday, and in the days following next week's Memorial Day holiday (May 26), there will also be 2-year, 5-year, and 7-year Treasury auctions.

U.S. Treasury market: Yields rise, pressure becomes apparent.

In recent months, Trump's erratic tariff policy has raised doubts about the 'special' status of the dollar and U.S. Treasuries in the market. Moody's downgrade pointed out that the U.S. deficit and interest costs continue to rise, adding new footnotes to this discussion. Meanwhile, investors are focusing on the tax cut plan pushed by the Republicans, which may expand the U.S. fiscal deficit.

Recently, U.S. Treasury yields have continued to rise, with the 10-year U.S. Treasury yield, known as the anchor for 'global asset pricing,' briefly surpassing 4.5% in early trading on Monday and rising by 3.96 basis points to 4.489% throughout Tuesday. The yield on the longest-term 30-year U.S. Treasury has shown even more significant increases, briefly exceeding 5% on Monday, reaching a new high since November 2023, and has once again approached that key level on Tuesday. Many traders are betting that long-term U.S. Treasury yields will soar, and Trump's tax cut plan has made the situation even more unstable. Data from the Chicago Mercantile Exchange (CME) on Monday confirmed a large number of positions betting that 10-year yields will rise to 5% in the coming weeks. In the past week, the options market has seen a trend of capital flow hedging against rising yields, with premiums paid for hedging against bond market sell-offs increasing.

J.P. Morgan strategists Jay Barry and Jason Hunter believe that amid structural changes in demand patterns and uncertainties in trade and monetary policy, the risk in the short term (U.S. Treasury yield curve) is biased toward a bearish steepening. Many industry insiders worry that soaring U.S. Treasury yields will pressure the relatively high valuations of U.S. stocks, leading to a decline in all three major U.S. stock indices overnight, with the S&P 500 ending a six-day winning streak. Matthew Miskin, co-chief investment strategist at John Hancock Investment Management, stated that if the 10-year yield breaks above 4.5%, it could pose resistance to the stock market. Michael Wilson, chief equity strategist at Morgan Stanley, also stated that a 4.5% 10-year U.S. Treasury yield is an 'important level' for stock market valuations over the past two years, and when the 10-year Treasury yield breaks this threshold, the stock market often faces valuation pressure. According to LSEG Datastream, the forward price-to-earnings ratio of the S&P 500 based on expected earnings over the next 12 months was reported at 21.7 times on Monday, significantly higher than the long-term average level of 15.8 times.

Japan's bond collapse: Aftershocks impact the globe.

Japan's government bond market has just experienced an epic collapse, with a ¥1 trillion 20-year bond auction failing miserably, and the Japan bond/GDP ratio soaring to 263% (far exceeding Greece's crisis threshold of 180%). The Bank of Japan is powerless to step in, resulting in a functional paralysis of the bond market. A vicious cycle is forming, with the depreciation of the yen causing import costs to soar by 15% and consumption plummeting by 2.9%. The Bank of Japan has been pushed into a corner, and rate hikes will trigger a wave of profit-taking in arbitrage trades.

This series of events is about to trigger global shockwaves, including the emergency withdrawal of trillions of yen in arbitrage funds, a cliff-like contraction in global dollar liquidity, and an acceleration of fiat currency devaluation leading to a surge in gold prices.

In-depth analysis: The U.S. debt dilemma.

The current crisis in the U.S. Treasury market appears to be due to excessive debt, but at a deeper level, it is the Triffin dilemma at the economic theory level. U.S. dollar hegemony and trade surpluses cannot coexist; to maintain the U.S. dollar's status as a world currency, it must provide dollars to the world through trade deficits, which leads to increasing debt for the U.S. Essentially, the U.S. is exporting U.S. Treasuries in exchange for other goods, trading deficits for financial surpluses. However, when the debt accumulates to a certain level, the credibility of the dollar deteriorates, other countries fear that the U.S. will default on its debt, the credibility of the dollar collapses, and its status as a world currency ends.

If the U.S. chooses not to engage in confrontations but instead opts for win-win cooperation with other countries, enhancing productivity through technology to accumulate wealth, it could also resolve issues. However, due to systemic problems in the U.S., the vast wealth accumulated from globalization and technological development has fallen into the hands of a few tech giants, unable to be used to repay debts. From an economic perspective, the Triffin dilemma is nearly unsolvable, and only through significant reforms at the monetary or ownership level can the U.S. hope to resolve its debt.

Cryptocurrency market: Price fluctuations.

While the bond market is turbulent, the cryptocurrency market also experiences certain fluctuations. Ethereum's daily chart price is consolidating between $2,400 and $2,750, forming a bullish flag pattern, targeting the resistance area of $3,000 to $3,100. If the price breaks above $2,600, it may further rise to $3,600. The key resistance area is between $3,000 and $3,100, with the 200-day exponential moving average providing bottom support for the price. Although the relative strength index is still close to the overbought area, it has clearly cooled down in recent days. If ETH breaks out with an RSI increase and increased trading volume, it may confirm a bullish trend; however, breaking below $2,400 could invalidate the flag pattern.

Bitcoin, along with other cryptocurrencies, has its own key positions, resistance levels, and support levels, making the market situation complex and volatile.

The dynamics of the global bond market and cryptocurrency market are intertwined, and investors need to closely monitor market changes and make investment decisions cautiously.

Bitcoin (BTC)

Bitcoin stealthily surged to 107 (speculated here as in thousands of dollars, i.e., $107,000) during the night, which is also the second resistance level given last night. After a pullback this morning, it seems unable to drop further. Yesterday, it surged after the daily line did not break, and this morning the daily line level has also experienced a pullback. Next up is the previous high of 1073 ($107,300); if it breaks, it will continue to surge. If it cannot break, it will still pull back. As for whether it can break the previous high of 11 ($110,000), there is another resistance level below 110,000 at 1083 ($108,300). There are only these two resistance levels for Bitcoin to move up. For those holding long positions who cannot hold, they can reduce their positions at these two levels. For those who like to short, it is advisable to operate lightly around the historical previous high of 110,000.

Today's market analysis: Pay attention to the position of $106,150 for Bitcoin today; as long as the small scale pullback does not break this position, all levels are bullish, continuing to rise with resistance levels to watch near $107,300 - $108,330 - $110,000; if today the pullback breaks below $106,150, then the 1-hour level will begin to correct, continuing to pull back to support levels to watch near $105,200 - $104,110 - $102,757.

Ethereum (ETH)

Ethereum pay attention to the position of $2515 today; as long as the small scale pullback does not break this position, all levels are bullish, continuing to rise with resistance levels to watch near $2557 - $2587 - $2618; if today the pullback breaks below $2515, then the 1-hour level will begin to correct, continuing to pull back to support levels to watch near $2481 - $2441 - $2414.

BNB

BNB performed strongly last night, taking off directly. Today pay attention to the position of $653; as long as the small scale pullback does not break this position, all levels are bullish, continuing to rise with resistance levels to watch near $669 - $681 - $692; if today the pullback breaks below $653, then the 1-hour level will begin to correct, continuing to pull back to support levels to watch near $645 - $640 - $636.

SOL

SOL pay attention to the position of $167 today; as long as the small scale pullback does not break this position, all levels are bullish, continuing to rise with resistance levels to watch near $170 - $173 - $176; if today the pullback breaks below $167, then the 1-hour level will begin to correct, continuing to pull back to support levels to watch near $164 - $160 - $155.

The cryptocurrency market is unpredictable, and investors need to closely monitor market dynamics and make investment decisions cautiously. The above analysis is for reference only and does not constitute investment advice.