Early Friday, the crypto market was risk-averse. The focus turned to upcoming remarks by Fed Chairman Jerome Powell after Thursday’s hawkish statements by other central bankers.

Bitcoin ( , BTC ) was trading flat at $27,000 after Thursday’s 2% drop. Ripple’s XRP suffered moderate losses. The dollar index fell to 102.30, from a two-month high price of 103.62. Futures for Wall Street’s tech heavy Nasdaq were flat.

Treasury yields increased along with an increasing probability that the Fed will deliver another 25 basis point rate hike next week, which helped keep investor appetite for risk under control. The 10-year yield rose to 3.67% – the highest level since mid March – and the weekly gain reached 20 basis points. The yield on the two-year note also reached a new two-month record of 4.08%. Bitcoin has recently decoupled Nasdaq, and moved in tandem gold, which moves in the opposite direction to bond yields.

In May, the markets were confident that the Fed would stop its tightening of liquidity cycle next month and move to rate reductions later in this year. On Thursday, the confidence was dashed after St Louis Fed president James Bullard argued for higher interest rates, and Dallas Fed president Lorie Logan stated that current data does not support pausing tightening cycles.

Marc Chandler, Bannockburn Global Forex’s chief market strategist, said in a daily update that “Hawkish remarks from Fed officials, and the first decrease in continuing unemployment claims under 1.8 million for two months, boosted US rates, and the odds of an increase in June rates rose to 37%.” He added that “this represents a nearly tripling of the likelihood in the last week.”

Reuters reported that a group Republican hardliners would block a deal if the agreement did not include robust spending reductions. The U.S. reached its debt ceiling of $31.4 billion earlier this year. This forced the Treasury to take extraordinary measures in order to keep the government running. Joe Biden, the President of the United States, expressed his confidence in the government’s ability to avoid a potentially catastrophic and unprecedented default.

Powell will be speaking at 15:00 GMT on the panel “Perspectives on Monetary Policy”, before the Thomas Laubach Research Conference, hosted by the Federal Reserve.

Powell’s hawkish speech was expected by some observers, which will ensure that the market flows at the end of the week remain risk-averse.

Craig Shapiro of LaDucTrading , a macro advisor, tweeted, “It seems like Powell must increase the odds for rate hikes today to be ready to go in June, if the debacle over the debt ceiling is set aside to find a quick resolution.” “Data is still too good, with the SEP expected to show a lower U rate for YE23 and a higher PCE. Both of these suggest that the dots on 24 are too low.”

Powell maintained a data-dependent policy stance in his press conference following the Fed’s 10th consecutive rate hike earlier this month.

Stephen Alpher edited the book.