The post Peter Schiff Warns of “1987-Style Crash” as US Treasury Yields Soar and Markets Panic appeared first on Coinpedia Fintech News
The U.S. stock market futures dropped sharply on Wednesday. The Dow Jones futures dropped 1.9% early Wednesday, with S&P 500 and Nasdaq futures down over 2% each. The sharp dip reflects growing investor fears as the 10-year Treasury yield surged to 4.4% and the 30-year yield briefly went above 5% overnight signaling stress in the bond market.
President Trump’s new tariffs have begun adding huge taxes on goods from Europe, Japan, Vietnam, and especially China. Strikingly, the Chinese products now face over 100% in total tariffs due to multiple increases and retaliation. The trade between these two countries could now massively take a hit due to the ongoing trade tensions.
China Selling US Treasuries
Besides, rumors suggest that China sold $50 billion in U.S. Treasuries, driving up yields and shaking bond markets, which could be a move to pressure the U.S. At the same time, China is stockpiling gold, reducing its reliance on the U.S. dollar and U.S. Treasuries.
Goldman Sachs analysts note that foreign investors are losing interest in U.S. assets. According to Reuters, several foreign governments are actively working to reduce their reliance on the U.S. dollar.
A Crash Like 1987’s?
What could go worse? Experts are concerned that the situation could lead to a crash like the one in 1987, unless any action is taken urgently.
Economist and a staunch crypto critic, Peter Schiff in a series of recent X posts has expressed concerns over the current market conditions. Schiff is known for his gloomy views on the U.S. economy and his strong belief in investing in real assets like gold.
He has suggested that without an emergency interest rate cut, and the initiation of the substantial QE easing program, there could soon be a ‘1987 style stock market crash’ reminiscent of the Black Monday of 1987.
Schiff warned that the crash that’s now happening in the bond market has more severe implications than the crash in the stock market. He predicts that if these tariffs remain in place, it could have lead to a major financial crisis in US possibly even worse than the 2008 crisis, which was one of the worst in history.
Has Trump’s Plan Backfired?
Peter Schiff warned that the collapse of the US treasury market signifies that Trump’s strategy to lower interest rates by triggering a recession has backfired. He says if the new tariffs aren’t rolled back soon, they could spark a financial crisis even worse than 2008.
Bitmex founder Arthur Hayes also pointed towards the increasing MOVE index, which is now at 139.88 as a warning sign for Fed to intervene in order to stabilise the markets.
ZeroHedge called the market chaos an ‘absolutely spectacular meltdown.’“Hi fed this is what the collapse of the $2 trillion basis trade you encouraged for so many years looks like.” it noted.
Will The Fed Intervene?
In response to the current market instability, there is rising speculation that the Fed may consider emergency measures such as rate cuts or a new QE easing program to inject liquidity and stability in the financial system. However, as of now, the Federal Reserve has not announced any such actions.
However it remains to be seen if the Fed will announce an emergency meeting to discuss the treasury yields’ unusual spike. Markets are on edge as traders await Fed’s possible meeting. Markets are already pricing in a rate cut. According to the CME FedWatch Tool, expectations for a rate cut in May have surged from just 10.6% last week to 58.9% now.
The Impact On Crypto Markets
If the Fed does cut rates, it could trigger a buying frenzy which could lead to a strong recovery rally in Bitcoin and broader crypto market. But if the Fed holds steady, both stocks and crypto could face more declines with Bitcoin possibly falling to the $70K range.
While the tariff tensions have caused the 10-year Treasury yields jump 17.16% in just 72 hours, meanwhile, Bitcoin is currently trading at $76,367, down over 3% in the past day. The global crypto market cap stands at $2.51 trillion, down over 5% in the last 24 hours. Other major top cryptocurrencies are also bearish as Ethereum has dropped over 7%, while XRP is down more than 5%, Solana (SOL) has slipped over 3%, and Cardano (ADA) has fallen more than 4%.
