Bitcoin Edges Higher After Senate Passes Stablecoin Bill — Market Talk
0725 GMT - Bitcoin rises slightly after the Senate passed legislation to regulate stablecoins, a widely used cryptocurrency typically pegged to a government currency such as the dollar. The bill is the first to establish federal guardrails on digital currencies and will now move to the House where is expected to pass. It marks a major milestone for the industry, raising hopes for further legislation to improve the legitimacy of cryptocurrencies and thereby bolstering demand. Bitcoin rises 0.4% to $104,804, according to LSEG. Gains are limited as investors remain cautious on risky assets amid the conflict between Israel and Iran. ([email protected])0702 GMT - It's time to buy medium-term JGBs on price dips, three members of BofA Global Research say in a note. "Bond market participants apparently believe the BoJ's next rate hike might come in October 2025 at the earliest," the members say. BOJ Gov. Ueda has continued to emphasize high levels of uncertainty surrounding the Trump administration's tariff policy, the members say. Also, no agreement was reached at the Japan-U.S. summit held on Tuesday, though talks will continue. Hence, it could be a while before markets start to price in the next BOJ rate increase, the members add. JGB 5-year yield last quoted at 1.005%. ([email protected])0653 GMT - The dollar falls as investors turn cautious ahead of the Federal Reserve's policy decision later. The widening of conflict in the Middle East and unpredictability of U.S. trade policy means the Fed is expected to leave interest rates unchanged in a decision at 1800 GMT, Hargreaves Lansdown's Susannah Streeter says in a note. That's despite the latest inflation reading being softer than expected. Comments from Fed Chair Jerome Powell will be closely watched for any indication of when a rate reduction will come, she says. "Wariness is set to remain the name of the game when it comes to monetary policy amid this escalation of conflict and erratic tariff threats." The DXY dollar index falls 0.2% to 98.869.([email protected])0649 GMT - A drop in inflation is good news for a Bank of England facing an increasingly complex global backdrop, Deutsche Bank economist Sanjay Raja writes. Headline consumer-price inflation eased a little to 3.4% in May, with services inflation notably dropping from a month earlier, according to figures released Wednesday. "Make no mistake: Despite the still elevated levels of inflation, this will be welcome news for the [BOE's] monetary-policy committee," Raja says. Policymakers will be increasingly convinced that an underlying cooling of price pressures remains on track, he says. The focus for the BOE will now turn to the geopolitical events driving energy prices higher, Raja adds.([email protected]; @joshualeokirby)0641 GMT - The Bank of England looks likely to keep interest rates in place at this week's meeting of the policy committee amid global uncertainty, Monica George Michail of the National Institute of Economic and Social Research writes. Annual inflation inched down last month to 3.4%, figures show Wednesday. But the rate is likely to stay above 3% for the rest of the year as a result of Middle East tensions and domestic wage and spending pressures, Michail says. "We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year," she says. ([email protected]; @joshualeokirby)0637 GMT - The situation in the Middle East is the main focus for markets right now, but there are other drivers, too, say market analysts at Deutsche Bank Research. In particular, the Federal Reserve's policy decisions and new projections will be watched closely given developments since its last meeting in early May, the analysts says. These include the U.S. dialing back China tariffs and Moody's Ratings' downgrade of the U.S. Deutsche analysts think the Fed will only signal one interest-rate cut this year, which would be a hawkish shift from March's signal of two cuts. However, they acknowledge that it's a close call. The 10-year German Bund yield is up 0.4 basis point at 2.539%; the 10-year Treasury yield is up 1.6 basis points at 4.406%, according to Tradeweb. ([email protected])0630 GMT - Sterling rises marginally after the latest U.K. inflation data came in line with expectations. Inflation eased to an annual rate of 3.4% in May from 3.5% in April, as expected by economists in a WSJ survey. Core inflation fell to 3.5% in May from 3.8% in April, as forecast. However, inflation remains well above the Bank of England's 2% target. There is likely little in the data to encourage BOE policymakers to move away from its "gradual and careful" guidance around interest-rate cuts, Pepperstone strategist Michael Brown says in a note. The BOE is set to leave rates unchanged Thursday, he says. Sterling rises to $1.3460 after the data from $1.3448 beforehand. The euro falls to 0.8548 pounds from 0.8554 pounds prior. ([email protected])0627 GMT - Australian Treasurer Jim Chalmers is on a quest to ignite an ambitious economic reform agenda, saying Wednesday that the Labor government has a responsibility to go beyond the mandate it won at the recent federal election, introducing change to boost productivity, including a shift in the tax mix. Chalmers acknowledged the need to ease the tax burden on workers. The government will host a three-day discussion with stake holders starting August 19. ([email protected]; @JamesGlynnWSJ)0621 GMT - The Bank of England will take some time yet to reach its inflation target, MHA economic adviser Joe Nellis says. Annual consumer-price inflation was 3.4% in May, cooling slightly from a month earlier, figures show Wednesday. But policymakers can't expect a sustained easing in inflation as conflict between Israel and Iran drives up oil prices, adding to potential price pressures from global tariffs, Nellis writes in a note. That means it will take the BOE most of next year to curtain inflation, with the 2% target likely not attained until 2027, he warns. "Sticky inflation will only reinforce the position of those advising putting the brakes on interest rate cuts," Nellis says. ( [email protected]; @joshualeokirby)0605 GMT - German Bunds should continue range trading before the market focus turns to the Federal Reserve's meeting later Wednesday, Commerzbank Research's Hauke Siemssen says in a note. Bond markets should also take clue from U.K. inflation data for May, which should set the tone for bond trading this morning, the rates strategist says. Any weakness in Bunds, stemming from the combined 2.5 billion euro tap of 2046- and 2054-dated Bunds at auction, could be used for dip buying, he says. "Further support could come from shaky risk-sentiment, as the escalation in the Middle East is unfolding," he says. The 10-year Bund yield closed at 2.537% on Tuesday, according to Tradeweb. ([email protected])0551 GMT - U.S. Treasury yields, which fell Tuesday across maturities, edge higher ahead of the Federal Reserve's policy decision. The Fed is widely expected to leave the fed funds target rate range unchanged at 4.25%-4.50% while investors consider rate cuts unlikely before later this year. "Resilient economy, sticky inflation and tariff-related uncertainty pushed back investors' expectations for the next Fed interest rate cut to September or October," says U.S. Bank Asset Management's Bill Merz in a note. The Fed's updated growth, inflation and policy rate projections will provide important forward guidance amid trade policy uncertainty, the head of capital markets research says. The two-year Treasury yield is up 0.6 basis point at 3.956%; the 10-year yield is up almost 2 basis points at 3.409%, according to Tradeweb. ([email protected])0539 GMT - The Federal Reserve's median projection for the policy rate shouldn't change from the March meeting, says Generali Investments' Paolo Zanghieri in a note. This indicates that the Fed continues to see two interest-rate cuts this year as optimal, the senior economist says. "However, the distribution of the projections will be tilted towards less accommodation," he says. Generali Investments still expects two rate cuts this year in September and December. However, it acknowledges that risks are tilted towards only one, at the end of the year, Zanghieri says. ([email protected])