Bitcoin Could Fall Sharply After Rising to Record High — Market Talk

0845 ET - Renewed concerns over the growing U.S. government debt pile appear to have prompted bitcoin's rise to record highs Thursday, but investors should exercise caution in buying the cryptocurrency, Hargreaves Lansdown analyst Susannah Streeter says in a note. "Investors should be wary about jumping onto the crypto rollercoaster as bitcoin has a tendency to fall sharply following rapid ascents." People should only invest money they can afford to lose, she says. The House passed President Trump's tax and spending bill Thursday after last-minute changes by Republican leaders. The proposal has fuelled concerns over rising U.S. debt, encouraging investors to seek dollar alternatives and boosting bitcoin. Bitcoin rises 2.6% to $110,099 after earlier hitting an all-time high of $111,862, according to LSEG. ([email protected])0828 ET - Optimism among small-business owners in Canada improved in May although it remains in territory associated with a recession. The Canadian Federation of Independent Business's monthly business barometer rose about 5 points from the previous month to 40.0. The federation says while confidence is tracking in the right direction, the barometer's index has yet to surpass 50--or the level where equal shares of business owners expect stronger or weaker sales performances. The May confidence report indicates that 16% of firms are mulling layoffs, versus 14% which are looking to hire. Meanwhile, nearly 60% of small to mid-sized firms report that weak demand remains their biggest headwind to sales growth. ([email protected]; @paulvieira)0825 ET - The selloff on longer-term Treasurys gains momentum, sending yields higher, as the House approves a budget bill that could widen an already worrisome deficit. Yields have been climbing amid rising concerns about the U.S. fiscal situation. The bill approved this morning is still subject to changes, but investors worry that spending would remain on an upward path, leading to higher bond issuance in coming years. Yesterday's lukewarm 20-year Treasury auction indicated that foreigners are demanding higher payout to finance U.S. spending. The 30-year yield reaches 5.145%, a level not seen since 2007. The 10-year is at 4.617%. The two year is at 3.990%, after settling yesterday above 4%. ([email protected]; @ptrevisani)0808 ET - Yields on U.K. government bonds, or gilts, climb, tracking their U.S. counterparts, due to fiscal worries after the U.S. House of Representatives passes a new tax and spending bill. The bill is likely to widen the gap between government's revenue and expenses, also know as the fiscal deficit. Market concerns about a possible increase in the country's deficit have caused investors to sell U.S. Treasury bonds, ING's Francesco Pesole says in a note. Following the vote, the U.K. 10-year gilt yields rise 2 basis points to last trade at 4.774%, Tradeweb data show. The U.S. 10-year Treasury yields climb 2bps to 4.621%. ([email protected])0808 ET - U.S. stock futures are lower after the House passes President Trump's tax-and-spending package with last-minute changes by Republican leaders. Stocks sold off sharply on Wednesday following a disappointing Treasury bond auction. Treasurys extend the selloff this morning, pushing up yields, with the benchmark 10-year yield topping 4.6% and the 30-year rising further above 5%. On the data front later this morning, preliminary purchasing managers indexes covering manufacturing and services will provide an early read on the economy in May. Among early stock movers, Advance Auto Parts surges 34% premarket after the car-parts retailer reaffirms fiscal-year guidance. S&P futures are off 9 points. ([email protected])0736 ET - An increase in Japanese government bonds yields this week indicates a significant shift in investor sentiment and a re-evaluation of the risks associated with Japanese government bonds, says Capital.com's Daniela Sabin Hathorn in a note. Tuesday's 20-year government bond auction experienced the weakest demand since 2012. "This reflects investor concerns over Japan's fiscal health and the Bank of Japan's tapering of bond purchases," the senior market analyst says. These affected longer-dated bond yields too. Historically, Japan has managed this massive debt burden through ultra-low interest rates and the Bank of Japan's yield curve control policy, she says. "However, recent monetary policy shifts have driven yields higher, escalating the cost of debt servicing." ([email protected])0719 ET - Dollar stays higher on the day, showing little reaction after the Republican-led House passes President Trump's tax and spending bill. It comes after Republican leaders made a series of last-minute changes to unite the party. The measure now goes to the Senate. Before changes were made, the bill was expected to add $2.7 trillion to the budget deficit over the next decade. This fueled concerns over the U.S. fiscal position following last week's U.S. credit rating downgrade from Moody's, hitting the dollar. The DXY dollar index last trades up 0.5% at 99.8070, little changed from levels before the decision. However, it has only recovered marginally from the two-week low of 99.3360 reached Wednesday.([email protected])0710 ET - Eurozone PMI data should open the door for the European Central Bank to cut rates in June, while leaving some uncertainty on the monetary policy outlook further out, HSBC economists say in a note. The composite PMI fell into contraction in May, to 49.5 from 50.4 in April. The ECB's decision will be helped also by the likely drop in inflation in May after April's upside surprise, the economists say. Afterwards, the outlook is more unclear. For instance, the PMIs point to a stalling labor market after two positive months, though it remains resilient overall. However, if the economy fails to improve over the summer, or should the U.S. tariff situation deteriorate, risks are skewed toward more cuts, they say. ([email protected])0707 ET - Bitcoin looks set to rise further after hitting a record high earlier, Standard Chartered's Geoff Kendrick says in a note. The U.S. Treasury term premium remains high, meaning investors are increasingly wary about long-dated bonds. This is supporting bitcoin as it has a positive correlation to the term premium, Kendrick says. Furthermore, inflows into U.S. spot bitcoin exchange-traded funds are rising. Strategy continues to purchase more bitcoin and recent data show broadened government buying of bitcoin proxies. Meanwhile, the U.S. has advanced a bill for stablecoin regulation. Standard Chartered expects bitcoin to rise to $120,000 by quarter-end, $200,000 by end-2025 and $500,000 by end-2028. Bitcoin rises 2.3% to $110,768 after earlier reaching a high of $111,862, according to LSEG. ([email protected])0701 ET - U.S. equities are expected to record a better performance in the second half of 2025 as the economy remains resilient and there are prospects of the U.S. Federal Reserve cutting interest rates, Federated Hermes' Steve Chiavarone says in a note. "As tariff uncertainties fade and new fiscal measures are introduced, we expect a more favorable environment for growth in the second half of the year." International investors are likely to continue investing in the U.S. which "remains a hub for innovation and growth," says Chiavarone, who is head of the multi-asset group at the money manager. "Financials and overlooked tech names offer compelling value." ([email protected])0656 ET - The eurozone's purchasing managers' surveys were weaker than expected, falling into contractionary territory and partly driven by a sharp downturn in Germany's services sector, ABN AMRO's Christophe Boucher says. The bloc's manufacturing sector surpassed the services sector in the survey for the first time in years, he notes, measuring 49.4 against 48.9 respectively. Uncertainty will continue to weigh on PMI data, at least until the EU and U.S. sign a trade deal, Boucher says. The report sends mixed signals to the European Central Bank: negative sentiment is weighing on businesses, while on the other hand inflationary pressures in the services sector are persisting, he says. ([email protected])0618 ET - German companies this month appear to have shrugged off Trump's tariff shock, Commerzbank's Joerg Kraemer says in a note. The Ifo business-climate index rose for a fifth straight month to 87.5 in May from 86.9 in April, driven by better business expectations for the coming six months. The survey reflects a better mood in export-orientated industries, with the index rising notably for the manufacturing sector, he says. Moreover, the positive effects of the European Central Bank's recent rate cuts outweigh the higher tariffs, Kraemer says. However, Trump's tariffs will likely eventually dampen the economic upswing, given German firms' exposure to the U.S. market, which will mean only stagnation in the German economy this year, he says. ([email protected])