Bitcoin Falls as Trump's EU Tariff Threat Dents Risk Appetite — Market Talk

0851 ET - Bitcoin falls after President Trump threatened to impose a 50% tariff on EU imports from June 1, hitting risk appetite. "The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump said in a post on his Truth Social platform. He said talks with the EU were "going nowhere."Bitcoin falls to an intraday low of $107,367 after the news, according to LSEG. It reached a record high $111,965 on Thursday. ([email protected])0840 ET - Treasury yields and the dollar fall as Trump threatens a 50% tariff on the E.U. starting June 1 and a 25% tariff on imported iPhones. Yields and the dollar were going down overnight and briefly changed direction after the tweets, while remaining below yesterday levels. In a nod to the fiscal concerns that rocked markets this week, Deutsche Bank's George Saravelos writes that the challenge around Trump's trade policies is that the U.S. deficit "requires ongoing funding from foreigners to be sustained." There is no major data point on tap ahead of Memorial Day. The 10-year yield is at 4.485% and the two-year at 3.929%. The WSJ Dollar Index falls 0.6%. ([email protected]; @ptrevisani)0826 ET - Oil prices continue to decline as concerns over global trade tensions and excess crude supply weigh on sentiment. Brent crude falls 1% to $63.74 a barrel, while WTI is down 1.1% to 60.50 a barrel after President Trump said he is recommending a 50% tariff on goods from the EU starting on June 1. Meanwhile, traders are increasingly worried about next week's OPEC+'s meeting, with many now expecting another large output hike in July. The move "would threaten an even greater supply surplus on the oil market," says Barbara Lambrecht, commodity analyst at Commerzbank Research. "This is because there are no signs of a revival on the demand side." ([email protected])0815 ET - The euro trims gains, while German government-bond yields extend falls after U.S. President Trump threatened to impose tariffs of 50% on goods from the European Union from June 1. "The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump said in a post on his Truth Social platform. He added that talks with the EU were "going nowhere." The euro falls to $1.1302, though it stays higher versus a day prior, having hit a two-week high of $1.1375 just before the announcement, FactSet data show. The German 10-year Bund yield falls 10 basis points to 2.543%, from around 2.611% beforehand, Tradeweb data show. ([email protected])0806 ET - Shares of semiconductor companies in the European Union fall after U.S. President Trump threatened a 50% tariff on the bloc. "Our discussions with them are going nowhere! Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025," Trump wrote in a post on Truth Social. Shares of Dutch semiconductor-equipment maker ASML Holding and smaller rival ASM International are down more than 3% in Amsterdam. German chip maker Infineon Technologies is down 3.5%, while STMicroelectronics--which supplies Apple, Samsung Electronics and Tesla--is down 4.7%. ([email protected])0706 ET - The cost of insuring Japanese government debt against default using credit default swaps rises amid concern about rising Japanese government bond yields and after stronger-than-forecast inflation raised the possibility of higher Japanese interest rates. "Overnight inflation data out of Japan had brought concerns of another push higher for bond yields amid a record high in both the 30-year and 40-year [yield] this week," Joshua Mahony, chief market analyst at Rostro says in a note. The 5-year Japanese credit default swap rises 1 basis point to 23bps, a six-week high, S&P Global Market Intelligence data show. ([email protected])0646 ET - LBBW doesn't yet see any reliable indication of a buyers strike on U.S. Treasurys by foreign investors, but weak demand at auctions suggest this is a growing risk, says senior fixed-income analyst Elmar Voelker in a note. "Signs of sluggish investor demand for new issues from the U.S. Treasury, such as the auction of 20-year Treasury bonds this week, are literally adding fuel to the fire," he says. Although investors in the auction were offered a yield over 5% for the first time since October 2023, the bid-to-cover ratio--a gauge of investor appetite--was below the average of the past four years, he says. ([email protected])0637 ET - The cost of insuring euro-denominated credit against default using credit default swaps declines as investor sentiment improves following better-than-expected macroeconomic data including Thursday's U.S. purchasing managers' index figures and Friday's U.K. retail sales and German GDP data. The iTraxx Europe Crossover index which tracks euro junk bond credit default swaps declines 1 basis point to 302bps, S&P Global Market Intelligence data show. ([email protected])0632 ET - The dollar falls to a two-week low as renewed concerns over U.S. tariffs weighs along with ongoing fears over the U.S. fiscal position. U.S. trade talks with the EU, China, Japan, and South Korea all appear to be stuck at an impasse, Monex Europe analysts say in a note. While fundamentals still remain dollar-positive, markets have been slow to turn more positive on the currency, they say. Meanwhile, the House on Thursday passed Trump's tax and spending bill, which is expected to increase the budget deficit. The DXY dollar index falls to a low of 99.305. ([email protected])0616 ET - Sterling rises to a three-year high against the dollar, supported by a weaker dollar and Friday's stronger-than-expected U.K. retail sales data. The dollar falls on mounting concerns over ballooning U.S. government debt after the House passed President Trump's tax and spending bill. U.K. retail sales rose 1.2% month-on-month in April, beating the 0.3% rise forecast by analysts in a WSJ survey. The broad takeaway from the data is that households continue to spend and "that puts a floor under just how much U.K. growth can soften," Monex Europe analysts say in a note. Sterling rises to a high of $1.3502, according to FactSet, but is flat versus the euro, which last trades at 0.8409 pounds. ([email protected])0559 ET - Over time, it may become politically desirable to reduce the U.S. deficit in order to bring long Treasury yields down and deliver support to mortgage rates, BlueBay CIO Mark Dowding says in a note. For now, this seems far off, however, he says. The U.S. administration has thrown down the gauntlet to the bond market and time will tell whether it attracts sufficient capital to stabilize yields, or whether the risks of a market tantrum could be on the rise, Dowding says. The 10-year Treasury yield is last down 3 basis points at 4.521%, while the 30-year yield falls 3.5 basis points at 5.029%, having hit an 18-month high of 5.161% on Thursday, according to Tradeweb. ([email protected])0459 ET - Two thirds of corporations surveyed by HSBC already experienced increases in costs due to the uncertainty around tariffs and trade, according to a survey by the global bank. Companies expect costs to increase further in both the short and long terms and forecast a revenue hit from supply chain delays. This is prompting more than three quarters of corporates to rethink their long-term business model. "The imperative for strategic adaptation is clear. Navigating this climate requires not only agility, but strong partnerships to ensure sustained growth in a shifting global economy," HSBC Global Trade Solutions' Vivek Ramachandran says. The survey draws from insight from 5,700 firms across 13 markets. ([email protected])