Bitcoin Eases After Hitting Fresh Record High — Market Talk
0700 GMT - Bitcoin pulls back as traders take profits after the cryptocurrency reached a fresh record high in the previous session. The earlier rally was driven by institutional demand, macroeconomic tailwinds and seasonal momentum, Deus X Pay director of trading James Madden says in a note. Spot exchange-traded fund inflows reached $3.2 billion for the week ended October 3. Macroeconomic factors include bets for further Federal Reserve interest-rate cuts and bitcoin's rising correlation to gold prices amid the U.S. government shutdown, he says. Bitcoin has also historically tended to rise in October. Bitcoin falls 1.1% to $123,923 after reaching a high of $126,223 on Monday, LSEG data show. ([email protected])0652 GMT - The dollar rises as political and fiscal concerns outside the U.S. weigh on other developed-market currencies. France is in fresh political turmoil after Prime Minister Sebastien Lecornu resigned less than a month after his appointment amid increasingly fraught budget negotiations, weighing on the euro. In Japan, the yen is under pressure on bets that the new leader of the ruling Liberal Democratic Party Sanae Takaichi will pursue loose fiscal and monetary policy. In the U.K., there are worries over fiscal sustainability ahead of November's autumn budget that pose headwinds to sterling. The DXY dollar index rises 0.2% to 98.318. ([email protected])0608 GMT - Pressure on the French government bond, or OAT, curve is still orderly, which should keep dip buyers in play near crucial levels, says Commerzbank Research's Christoph Rieger in a note. In a surprise move on Monday, Sebastien Lecornu resigned as prime minister, but President Emmanuel Macron tasked him to continue negotiating to find a way out of the impasse by Wednesday evening. "While fiscal dynamics remain very challenging and the political situation deadlocked, opportunistic demand from domestic banks and foreigners should inhibit a sustained widening above 90 basis points in 10-year spreads above Bunds," the head of rates and credit research says. The 10-year OAT-Bund yield spread is 85.6 basis points after opening, little changed from Monday's close, according to LSEG. ([email protected])0555 GMT - U.S. Treasury yields decline in Asian trading hours as the government shutdown continues. "Whilst we foresee the 10-year U.S. Treasury yield finding its way higher towards 4.5% from a structural perspective, we do think the shutdown will prevent that move from materialising for now," ING rates strategists say in a note. At the same time, the strategists don't expect that the 4% level can be broken on the downside without more reliable data to work with, they say. A $58 billion auction of three-year Treasury notes will kick off this week's Treasury sales. The two-year Treasury yield falls 0.7 basis points to 3.589%, while the 10-year Treasury yield is down 1.2 basis points at 4.149%, according to Tradeweb. ([email protected])0536 GMT - French politics is putting further pressure on the country's government bonds, known as OATs, following the resignation of the recently appointed Prime Minister Sebastien Lecornu on Monday. "The political turmoil means that it is increasingly likely that the 2025 budget will be extended into 2026, and hence that fiscal consolidation measures will not come into effect," Danske Bank Research's Filip Andersson says in a note. This should continue to put pressure on OATs, with the spread widening over German Bunds signaling increased uncertainty regarding the fiscal outlook as France struggles to pass budgets that bring down deficits, the co-head of fixed income and FX research says. The 10-year OAT-Bund yield spread closed at 85.5 basis points on Monday, according to LSEG. ([email protected])0453 GMT - The auction of 30-year Japanese government bonds drew solid demand, confirming investor appetite for high yields. Analysts had expected sluggish results amid concerns that Japan's debt conditions may worsen after the ruling party elected Sanae Takaichi, a proponent of expansive fiscal policy, as its new leader. The auction's tail, or the gap between the average and lowest accepted prices, stood at 0.17, compared with 0.18 in September--a shorter tail indicates stronger demand. Fiscal worries have eased somewhat after Takaichi appointed Taro Aso, a former prime minister known for favoring fiscal discipline, as the party's vice president, says Masahiro Ichikawa, strategist at Sumitomo Mitsui DS Asset Management. The yield on 30-year JGBs is last up 6.0 bp at 3.345%. ([email protected])0336 GMT - Taiwan's September exports likely increased 42.3% from a year earlier, according to the median estimate of seven economists polled by The Wall Street Journal. Taiwan's trade data will offer further insights on the tech trade cycle and the impact of U.S. tariffs. The island's exports growth slowed in August after marking its fastest pace of growth since 2010 in July. Citi economists expect Taiwan to report that its September exports remained strong on seasonal tech exports and resilient AI demand, while non-tech exports likely stayed weak. A favorable change in the timing of the Mid-Autumn Festival, which fell in October this year compared with September last year, could also support September's export figures, DBS economists add. ([email protected])0329 GMT - The Singapore dollar strengthens slightly against its U.S. counterpart in the Asian session as traders await fresh catalysts. The Fed is still likely to release the minutes of its September meeting on Wednesday even if the U.S. government stays shut, CBA's Global Economic & Markets Research team says in a report. The minutes could show the discussion behind the central bank's decision to resume rate cuts and how likely and swiftly the FOMC will deliver follow-up rate reductions, the team adds. USD/SGD edges 0.1% lower to 1.2902, LSEG data shows. ([email protected])0256 GMT - China's overall mobility and consumption activity during the week-long National Day holiday appears to be relatively soft, Nomura analysts say. Mobility data for the first five days of October has lagged behind the Labor Day holiday in May, they note. Box-office revenues are also well below year-ago levels. Tourism trips are likely to show only single-digit growth for the full period, the analysts add. Nomura expects consumption to stay weak for the rest of the year. ([email protected])0240 GMT - New Japanese ruling party leader Sanae Takaichi's fiscal policy direction is likely to continue supporting improving earnings growth among Japanese companies, say Eastspring Investments' Vis Nayar and Ray Farris. Takaichi has advocated for greater government direction over monetary policy to stimulate the economy, flexible fiscal policy and government investment in strategic sectors such as AI and semiconductors. They expect her to push for a mild fiscal stimulus in a FY 2025 supplementary budget before implementing more expansionary measures such as raising income-tax thresholds for FY 2026's budget. "Ms. Takaichi's 'responsible proactive fiscal policy,' Sanaenomics for short, should prove to be fiscally expansionary over time," they write in a note. ([email protected])0210 GMT - The JGB yield curve's "twist steepening" could be overdone, DBS Group Research's Eugene Leow says in a commentary. Although newly elected Liberal Democratic Party leader Sanae Takaichi is perceived to have an expansionary fiscal and monetary policy stance, a lot of these expectations may have been priced into the market, the senior rates strategist says. Front-end JGB yields might be underpricing BOJ rate-hike expectations. "We are not convinced that the BOJ should further slow from its already glacial pace of normalization," Leow says. Risks of too-loose monetary policy and spillover into long-to-ultralong JGB maturities need to be considered, he says. The 40-year JGB yield will probably face meaningful resistance around 3.60%, Leow adds. The 40-year yield last closed at 3.505%. ([email protected])0208 GMT - The Bank of Thailand is expected to cut its policy rate by 25 bps to 1.25% on Wednesday, according to 11 of 12 economists polled by The Wall Street Journal. The decision will be the first under newly appointed Governor Vitai Ratanakorn, who is known for his dovish monetary policy stance. "Weak economic growth remains the main reason for expecting more easing," economists at Capital Economics say in a note. Looking ahead, Thailand's economy is likely to be weighed down by fewer Chinese tourists, higher U.S. tariffs and sluggish investment. However, UOB economist Sathit Talaengsatya expects the BOT to hold in Octover, but deliver a "dovish pause," thanks to a complete transmission from the 25bp cut from August through the economy. ([email protected])