Pictet Asset Management recently issued a warning: the US Treasury yield curve term premium (the extra yield for long-term bonds compared to short-term bonds) is at an unusually low level. What does this mean? Simply put, investors are not being adequately compensated for holding US bonds long-term.

Where are the risks? Once US policy goes wrong—such as economic data deteriorating or central bank decisions being inappropriate—the market could trigger a sell-off. At that point, yields will be forced higher, which would be a nightmare for bondholders.

What are the current expectations for the 10-year yield? Institutions believe there is a clear mismatch here. Low term premium combined with policy uncertainty often signals an upcoming market adjustment. For crypto assets, rising long-term interest rates usually mean risk assets are under pressure. So, this signal is worth paying attention to.