What Is YFI

On August 24, Federal Reserve Chair Walsh will make his debut as chair at the Jackson Hole Central Bank Annual Meeting this Friday. The market anticipates that his speech will further clarify the policy framework following the significant reduction in forward guidance, aiming to alleviate the recent tensions in the U.S. bond market. Previously, Walsh had reduced guidance on the future interest rate path in policy communications and even hinted at a possible adjustment to the inflation target, raising concerns about the Federal Reserve's transparency and policy credibility. Surveys indicate that over 60% of economists believe the Fed's credibility crisis has significantly impacted the surge in long-term U.S. bond yields. Meanwhile, Treasury Secretary Basant is attempting to lower borrowing costs by expanding the repurchase of longer-term U.S. bonds, while Walsh seems to tacitly approve of rising long-end yields, leading the market to focus on the policy divergence between the Fed and the Treasury. Analysts warn that if Walsh fails to provide clear policy signals on Friday, it may be viewed by the market as 'disappointing,' further exacerbating the sell-off in long-end U.S. bonds. Conversely, if he can clearly define potential inflation pressures, it could reduce term premiums and ease pressure on the bond market.

On August 24, Minneapolis Federal Reserve President Neel Kashkari stated that there are currently no signs of dysfunction in the US Treasury market. Although the 10-year Treasury yield is close to 4.7%, which is high, it is not at historically abnormal levels. Therefore, the Federal Reserve can still prioritize controlling inflation rather than adjusting policies in response to fluctuations in Treasury yields. This means that even if US government debt exceeds $40 trillion, the Federal Reserve will not make stabilizing the long-term bond market a policy goal in the short term. This stands in stark contrast to the Treasury's recent approach of expanding long-term bond repurchases to lower financing costs. The Treasury aims to reduce long-term yields, but the Federal Reserve has not committed to providing policy support, so long-term yields will continue to be primarily determined by inflation expectations, fiscal supply, capital demand driven by AI investments, and term premiums. If Treasury interventions cannot sustainably lower yields, it may further highlight the impact of US fiscal fundamentals on bond market pricing. Meanwhile, market bets on a rate hike by the Bank of Japan on September 18 have risen to about 82%, significantly increasing since the July meeting, with the yen approaching the 160 mark again. If Bank of Japan officials signal further rate hikes before the meeting, it could lead to yen appreciation and increase the pressure for capital to flow back to Japan, further affecting global bond and risk asset allocations. Additionally, the breakdown of US-Canada trade negotiations and the increase in tariffs on Canadian goods have reignited supply chain and inflation risks. Against the backdrop of US fiscal pressures, inflation risks from energy and trade, and potential divergence in monetary policies between the US and Japan, the market needs to focus not just on interest rate cut expectations but on whether global capital costs can stabilize. This week's Jackson Hole meeting will serve as an important observation window, as comments from Fed officials regarding inflation, long-term yields, and the Fed's policy framework will directly impact the pricing of the dollar, US Treasuries, and risk assets.

DYdX has released a post-analysis of the significant price fluctuations of SUSHI and YFI on dYdX v3, successfully tracked down the responsible parties and reported to the law enforcement department. dYdX is assisting the law enforcement department in investigating this matter and evaluating all legal options.