Bitcoin Falls, Stays Stuck Below $110,000 — Market Talk

0808 ET - Bitcoin falls, staying stuck below the psychologically key $110,000 level. Investors lack enthusiasm about a U.S.-China framework agreement due to a lack of details, Trade Nation's David Morrison says in a note. They are also cautious ahead of U.S. inflation data due at 1230 GMT, which could show tariffs feeding through into higher prices. "Markets showed a clear lack of conviction, preferring to sit on the sidelines until today's U.S. inflation data provides more clarity on rate expectations," Morrison says. Bitcoin only briefly topped $110,000, he says. Bitcoin falls 0.6% to $109,264. The cryptocurrency hit a two-week high of $110,446 on Tuesday, LSEG data show. ([email protected])0803 ET - Britain's Labour administration will very likely to have to raise taxes this year if it is to keep within its rules on borrowing, says Stephen Millard of the National Institute of Economic and Social Research. Government finance chief Rachel Reeves on Wednesday said she will stick to the fiscal rules that cap how much the state can borrow as she set out a review of public expenditure for the coming years. But with spending rising and the budget offering little room for maneuver, it is "almost inevitable" that Reeves will have to raise taxes when she next outlines the government budget in the autumn, Millard says. (([email protected]; @joshualeokirby)0744 ET - The recent selloff of U.S. assets is more likely due to the shock from President Trump's tariff policies rather than by a loss of faith in the dollar's status as a reserve currency, says Oxford Economics' Innes McFee. Still, the dollar's reserve status could be undermined if the current cyclical pressure on U.S. assets develops into a longer-term trend, the chief global economist says. "To reach that stage, we think trade protectionism would need to be exacerbated by other drastic policy changes." The U.S. would have to adopt measures to directly limit capital flows and to allow U.S. public debt dynamics to become unsustainable. ([email protected])0506 ET - Fitch Ratings has revised the 2025 global sovereigns outlook to 'deteriorating' from 'neutral', it says. This reflects the increase in trade tariffs and policy uncertainty, which will weaken the global growth outlook, the ratings firm says. Financing conditions could also become more testing. Public finance and political risks remain high, Fitch says. "Public finances will remain under pressure in 2025 from rising defence spending, interest costs, demographic trends, weak growth and social pressures, particularly in developed markets." Rating outlooks are close to balance in mid-2025, with 13 on positive outlook versus 10 on negative outlook, it says. ([email protected])0413 ET - The recent trend for steepening of the U.S. Treasury yield curve--where the gap between short- and long-dated yields widens--probably isn't over, Credit Mutuel Asset Management's Francois Rimeu says in a note. "There is still no fiscal discipline in the United States," the senior strategist says. "Some historical buyers are turning away from U.S. debt." Many domestic markets also offer more attractive returns for international investors, for example Japan, he says. Yield curves have been steepening for almost 24 months now as investors demand higher term premiums, he says. Term premium is the additional yield investors demand for holding a long-dated bond rather than a short-dated bond. ([email protected])0411 ET - The U.K.'s Debt Management Office is due to sell 4.25 billion pounds in 10-year government bonds, or gilts, at an auction at 0900 GMT. Demand should be helped after Tuesday's weak U.K. jobs data, RBC Capital Markets analysts say in a note. The bonds, which mature in March 2035, are also trading toward the cheaper end of the range they have traded in during recent weeks, they say. The March 2035 gilt was last tapped on May 14 and is scheduled to be tapped again twice next quarter. The yield on the 10-year gilt rises 3.5 basis points to 4.585%. It hit a one-month low of 4.528% on Tuesday, Tradeweb data show. ([email protected])0345 ET - Bank Indonesia is expected to cut its policy rate by another 50bps to 5.0% this year, Nomura economists write in a note. This comes after the central bank resumed its rate cutting cycle in May and reiterating its forward guidance to monitor room for further easing to support growth. However, the economists emphasize that the timing remains highly uncertain. BI still prioritizes FX stability, which requires a supportive external backdrop, they say. For now, Nomura expects a 25 bps cut each in September and December. These are plausible windows, due to factors such as near-term U.S. tariffs uncertainty, the economists add.([email protected])0342 ET - Sterling falls, hitting a one-month low against the euro, after weak jobs data on Tuesday and ahead of Wednesday's U.K. spending review. Yields on U.K. government bonds, or gilts, rise ahead of the review. ING analysts say the announcement will provide little new information. It will show only how budgets will be distributed across different departments. However, it will emphasize that there is little spare money and that tax rises could be needed later this year. This could weigh on gilts and sterling, potentially lifting the euro towards 0.8500, they say. The euro rises 0.1% to a high of 0.8474 and sterling falls 0.2% to $1.1409, LSEG data show. Ten-year gilt yields rise 2 basis points to 4.573%. ([email protected])0333 ET - The Chinese yuan may remain under pressure in the medium term despite some supportive short-term factors, according to Barclays Bank analysts in a research note. USD/CNY has sustained a move below 7.20 recently, the analysts point out. "Near-term dynamics such as the strengthening in China's external position would be CNY supportive, but eventually we see exports faltering and the trade and current account surplus narrowing," the analysts say. They add that China is likely to utilise the CNY as a "release valve" to maintain export competitiveness. This is due to ongoing pressure on the economy and the country's continued reliance on exports as key growth driver, the analysts say. USD/CNY last traded at 7.19. ([email protected])0310 ET - Malaysia's foreign portfolio inflows are likely to continue in the near-term due to factors including relatively attractive real yields, say economists at Kenanga IB. The capital market saw its inflows touch MYR14.4 billion in May, the highest since March 2016, they say in a note. Along with macro stability, this could strengthen Malaysia's credit rating profile. A firmer ringgit may also lift demand for local bonds. However, sentiment could be weighed by persistent global trade tensions and a potential hawkish stance from the Federal Reserve. "Even so, signs of U.S.-China de-escalation could help steady capital flows," the economists add.([email protected])0254 ET - The dollar trades steady after the U.S. and China concluded two days of trade talks. Representatives from the countries said the framework would restore a pact they agreed to in Switzerland last month, a deal that saw both sides lower tariffs. Analysts note that there is a lack of details about the framework. "The talks are seen as positive for markets in the short term, but we know from previous trade talks that the good mood can fade quickly between the two sides," Danske Bank analysts say in a note. Investors await U.S. inflation data at 1230 GMT. The DXY dollar index is at 99.112, holding above last week's six-week low of 98.351. ([email protected])0232 ET - Government bond issuance in developed markets is set to concentrate on the 10-year maturity on Wednesday. These debt auctions will be held as markets await U.S. CPI data for May with a likely uptick from April. Auctions from Sweden, Norway, Germany, Portugal, the U.K. and the U.S. will be for 10-year bonds or will include them beside another one. Eurozone 10-year government bond yields trade around 1 basis point higher, with the Bund yield at 2.539%, according to Tradeweb. The 10-year U.S. Treasury yield is also up 1 basis point at 4.483%. ([email protected])