Crypto Market Cools as Focus Shifts from Tariffs to Interest Rate Uncertainty

Markets Stumble as Rate Fears Overshadow Trump’s Trade Pivot

Investors welcomed a softened trade stance from President Trump on Thursday, but excitement quickly faded as surging bond yields and stagflation risks took center stage.

Stocks and crypto initially climbed after Commerce Secretary Howard Lutnick announced that Mexico would be exempt from Trump’s proposed 25% tariff on goods covered by previous trade deals. The president later confirmed the decision on social media, briefly lifting bitcoin (BTC) past $91,000.

But optimism didn’t last. By midday, the Nasdaq had slid 2.3% to session lows, while bitcoin reversed gains, dropping to $88,500—down nearly 1% over the past 24 hours.

Global Bond Yields Flash Warning Signs

While trade policy has dominated headlines, the bigger issue for markets is the relentless rise in interest rates worldwide.

With U.S. military support for Europe in question, countries across the continent are ramping up defense spending, sending bond yields soaring. Germany’s 10-year Bund yield jumped 40 basis points this week to 2.83%, one of its biggest spikes in years. In Japan, long-dormant bond markets are waking up, with the 10-year Japanese Government Bond (JGB) hitting 1.51%—more than twice its level six months ago.

In the U.S., bond traders are also on edge. After months of easing, the 10-year Treasury yield has spiked 20 basis points in just two days, reaching 4.30%.

“The bond market is screaming stagflation,” said Quinn Thompson, head of Lekker Capital. “Rates are climbing even as growth slows—a dangerous setup for risk assets like crypto.”

Jobs Data Could Be the Next Market Shock

Friday’s U.S. Nonfarm Payrolls report is now a key event, with economists forecasting 160,000 new jobs, up from 143,000 in January. The unemployment rate is expected to remain at 4%, but any upside surprise could push rates even higher, pressuring stocks and crypto further.

“The bond market is bracing for a hawkish shock,” Thompson added. “If jobs data comes in hot, it could trigger another leg down for equities and bitcoin.”

With economic uncertainty rising, traders should brace for volatility. While Trump’s trade shifts continue to make headlines, interest rates—and the Fed’s response—remain the real driver of market sentiment.

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