You know markets are chaotic when even the Treasury yield has a prediction market. And yes, now it does. It gets the attention from more than just the finance nerds now.
Kalshi now offers a real-money market where traders can bet on where the 10-year bond yield will land each week.
It’s gaining traction — the cumulative trading volume of this market is already $9.9 million. The 10-year note has been flirting with its highest levels in two months, thanks to a wave of tariff-driven panic, bond auctions, and inflation jitters. Even President Trump’s surprise tweet to “buy the dip” hasn’t settled the nerves.
Bond market has long been the hedge tool for a volatile stock market. If a 10-year note loses its status as a safe haven during a volatile market, one could always hedge risk of the hedge tool with another hedge, the prediction market.
Wait, why are we betting on bond yields?
Let’s back up. Bond yields go up when bond prices go down. And bond prices go down when everyone panics. It’s basic, but this week has been anything but.
On April 9, President Trump unexpectedly paused tariffs on most U.S. trading partners for 90 days, while hiking China’s rate to 125% — a move that sent markets soaring, but left Treasury traders whipsawed. Yields on the 10-year surged to 4.5% intraday, then eased back after a hotly-anticipated bond auction. As the market rally cooled on April 10, the yields went right back up again.
The Fed also is unlikely to add into this equation yet. Allianz chief economist Mohamed El-Erian told BBC that he thinks the Fed would be “torn” over what action to take, given its main mandates are to manage inflation and maximize employment.
How does Kalshi's bond market work?
The Kalshi contract pays out if the par rate for the 10-year Treasury finishes the day within the selected range. You pick a band (say, 4.45% to 4.49%) and if the yield lands there by market close, you win. Lest it serves as a hedging tool for…recession odds?
It’s especially relevant this week, as yields:
- Spiked above 4.5% for the first time since February
- Settled near 4.36% on Wednesday after a rollercoaster session
The case for a yield pop
- Traders don’t believe the 90-day pause will last — and China is said to be at a staggering 145% rate.
- Despite a decent 30-year auction, demand is still weak compared to pre-tariff levels.
The case for a yield drop
- The 30-year Treasury auction on April 10 drew a decent amount of foreign interest, hinting that big investors aren’t done with bonds.
- With equities spiking and geopolitical risks still looming, bonds could see a rebound bid.
Why it matters
The 10-year Treasury yield affects everything from mortgage rates to credit cards. This isn’t just a finance nerd number — it’s the heartbeat of global borrowing costs.
As Trump’s tariff maneuvering and the bond market’s backlash dominate headlines, even casual traders are tuning in. Kalshi’s new market lets them play the volatility without buying a bond or learning what a duration hedge is.
And right now? The yield curve isn’t just an economic indicator — it’s the new political opposition.
