The U.S. bond market is offering high yields across all maturities of the curve. The 10-year Treasury yields 4.79%, and the Federal Reserve is showing no sign of easing. At the same time, the tokenized debt segment is growing—traditional bonds issued as tokens on a blockchain. The two markets share the same curve, but over the past 30 days they have shown opposite capital flows.

Tokenized bonds: yields hold up, but capital is flowing out

The 10-year U.S. Treasury bond (US10Y) yields 4.79%, while the 2-year maturity stands at 4.35%. The federal funds target range remains between 3.50% and 3.75%, unchanged since the late-July meeting. Tokenized government debt invests almost exclusively in Treasury bills with maturities of less than 12 months. Investors therefore receive the yield of the very short end of the curve, not that of longer maturities.

The annualized rate calculated over the past seven days stands at 3.44%, up 2.50% from the previous week. The futures market is pricing in no cut at the September 16 meeting; instead, it is pointing in the opposite direction. As of September 3, CME FedWatch assigned a 50.3% probability to a 25-basis-point hike, down 13 percentage points in a single session.

However, looking at today’s data, there has been another shift, with the probability of a hike returning to 60.30%. This behavior reflects the nervousness surrounding Fed rates.

Bonds dominate tokenization

Within the RWA (Real World Asset) market, tokenized debt is by far the most significant component, as shown in the attached image.

Bonds account for $16.631 billion in active market capitalization spread across 171 different assets. They are followed by precious metals, with $6.078 billion, and private credit, with $4.134 billion. Listed equities account for 4,213 recorded assets, but are worth just $2.126 billion in total.

Within the bond segment, capital is being redistributed

Total assets in tokenized U.S. government debt funds fell 1.56% over 30 days, to $15.92 billion. That decline, however, conceals substantial capital movements among individual products.

WisdomTree raised $455.69 million over the same period, while Spiko’s European eurSAFO fund attracted $227.14 million. On the other side, Circle’s USYC product suffered $324.15 million in redemptions. BlackRock’s institutional BUIDL-I fund lost $237.5 million, while Superstate lost $155.59 million. Capital is therefore not leaving the segment; it is changing issuers.

Tokenized bonds remain idle, just like traditional bonds

A traditional bond remains idle in a securities account until maturity or sale. A tokenized bond, on the other hand, should be usable as collateral for borrowing or traded on platforms. This is the technical reason for issuing debt on a blockchain.

The figures show that, in practice, almost no one does this. Of the $16.631 billion in tokenized bonds, only $769.78 million is being used in this way, equivalent to 4.6% of the total. BlackRock’s BUIDL fund stands at 0.64%, while Franklin Templeton’s iBENJI records no such use.