After a year marked by rising yields and capital flight to equities, bond markets may finally be on the verge of recovery. According to Reuters, the U.S. Treasury market — which has seen losses so far in 2025 — could stage a late-year comeback if inflation continues to cool and the Federal Reserve signals rate cuts ahead.
Institutional investors are already positioning for a shift, as softening economic data suggests the Fed’s tightening cycle may be near its end. A sustained rebound in government bonds would not only stabilize portfolios but could also restore confidence in long-duration assets, after a year of heavy sell-offs.
For now, traders remain cautious. The yield curve remains inverted, and global liquidity remains tight. But should yields begin to fall, fixed income could reclaim its “safe haven” status — drawing capital away from riskier markets such as crypto and growth equities.
Why it matters:
If bond yields drop and prices rise, institutional money could rotate out of cryptocurrencies and back into bonds. For crypto investors, this shift could mean lower inflows and short-term consolidation, especially as traditional markets regain appeal.
