Bitcoin Pulls Back After Gains on U.S.-China Trade Progress — Market Talk

0714 GMT - Bitcoin edges lower as it gives back gains from the previous session driven by the U.S. and China agreeing a temporary reduction in tariffs. Investors welcome the easing in trade tensions but remain cautious, IG analysts say in a note. Tariffs remain historically high and still pose risks to global growth, they say. The truce has dampened interest-rate cut expectations for the Federal Reserve. Markets are now turning their focus to key U.S. inflation data at 1230 GMT and upcoming earnings amid "lingering uncertainty" over what will follow the 90-day U.S.-China tariff reprieve, IG says. Bitcoin falls 0.2% to $102,463 after hitting a three-and-a-half-month high of $105,716 Monday, according to LSEG. ([email protected])0655 GMT - The dollar eases after reaching a one-month high in the previous session when the U.S. and China announced a deal to lower tariffs for 90 days. Markets are suffering a "bit of a hangover" after Monday's rally as investors take a moment to question how good the U.S.-China news really is and how long the truce will last, Swissquote Bank's Ipek Ozkardeskaya says in a note. "While recent days have brought major progress to the table, this isn't the end." The DXY dollar index falls 0.2% to 101.618 after reaching a high of 101.977 on Monday.([email protected])0643 GMT - Sterling is little moved after data showed the U.K. unemployment rate rose and wage growth eased in the three months to March but both were in line with expectations. The unemployment rate rose to 4.5% from 4.4% in the previous three months, according to the Office for National Statistics. Average earnings, excluding bonuses, increased 5.6% compared to 5.9% previously. The labor market continues to gradually weaken but the data must be taken with a pinch of salt given ongoing ONS survey issues, Pepperstone strategist Michael Brown says in a note. Sterling rises 0.2% to $1.3193, compared with $1.3200 before the data. The euro trades flat at 0.8419 pounds, versus 0.8421 before the data. ([email protected])0642 GMT - The U.S.-China trade agreement shows that the White House is keen on de-escalating tensions much faster, Invesco global market strategist David Chao says in a research note. The U.S.'s recent tariff reprieve and the road toward normalizing trade policies could pivot the macro environment back to a pre-2025 state, the analyst notes. The U.S.-China trade agreement could lead to "a burst in pent-up exports in the coming months, as many domestic manufacturers and exporters may have held up their shipments to the U.S. in April," he says. Still, the analyst notes that the 30% additional tariffs on Chinese imports will likely be felt, and tariff uncertainties on sectors such as electronics and chips remain. ([email protected])0641 GMT - The Bank of England has to tread a jobs-market tightrope as wages keep growing quickly despite signs of softening in employment, Capital Economics' Ruth Gregory writes. Vacancies and fell and unemployment rose in the first months of the year, according to figures set out Tuesday. But average wage growth remains rapid at 5.6% over the period. "The combination of weakening labour activity but still-high wage growth leaves the Bank in a tricky position," since rising pay adds to inflation in the short term, Gregory says. That will probably keep the Bank of England cutting interest rates at a gradual pace of once every quarter, she tells investors. ([email protected]; @joshualeokirby)0635 GMT - Singapore's non-oil domestic exports growth likely eased to 4.35% in April, according to the median estimate of eight economists polled by The Wall Street Journal. That would compare with March's growth rate of 5.4%. The expected easing in growth for April will align with a moderation in industrial output growth in recent months, says Eugene Tan, associate economist at Moody's Analytics in an email. This is due to waning effects of frontloading orders, with expectations of rising tariffs, Tan writes. The April data are due Friday. ([email protected])0629 GMT - Wage growth among U.K. workers will likely remain a point of concern for some Bank of England rate setters despite showing signs of losing pace, Joe Nellis at MHA writes in a note to clients. Average regular pay increased by 5.6% in the three months through March, slowing from 5.9% in the previous three-month period, data show Tuesday. But pay packets are still growing faster than price inflation amid a tight labour market, Nellis notes. "As a driver of inflation, this persistent high wage growth is something that the Bank of England has their eye on," he says. "If it continues, it will be a sore spot for an already divided monetary-policy committee as it explores further interest rates cuts this year."([email protected]; @joshualeokirby)0626 GMT - Eurozone government bond yields are marginally higher in early trade but looking to stabilize after Monday's selloff. The selloff, which caused yields to rise, was triggered by risk-on sentiment as the U.S. and China agreed to mutually slash tariffs for a 90-day period. "The front-end sell-off gathered pace yesterday, owing to the U.S.-China tariff reversal (for 90 days, at least) surpassing all expectations," Citi Research's Jamie Searle and Andrea Appeddu say in a note. The momentum seems to be shifting bearish for global short-end bonds, but Citi would expect eurozone bonds to be the most resilient should it persist, the rates strategists say. The 10-year German Bund yield rises 1.4 basis points to last trade at 2.660%, according to Tradeweb. ([email protected])0613 GMT - The impact of the U.S. inflation report on the Treasury market, notably the 10-year Treasury yield, may be clouded due to the slashing of tariffs between the U.S. and China, The Wealth Alliance's Robert Conzo says. Ten-year Treasury yields have seen violent swings since April 2, attributable to the flip-flopping of tariffs and trade policy by the Trump administration, the CEO and managing director says. "While tariffs can be inflationary and are perceived as a tax on the consumer, the 90-day pause on reciprocal and China's tariffs could mean that we may not see these inflationary effects in the hard data (CPI, PCE reports) for some time," he says. As the Trump administration continues to negotiate trade deals, the volatility in markets may become more normalized, he says. ([email protected])0604 GMT - Like much of the economic data in 1H 2025, including Tuesday's U.S. inflation report for April at 1230 GMT, will likely be difficult to interpret given ongoing trade policy uncertainty, says Madison Investments' Mike Sanders. "It's still too early to gauge the magnitude of the tariff effects or determine how much consumer pre-buying may be skewing the data," the head of fixed income says. Barring a major surprise, Madison Investments expects a muted market reaction to the data, although a higher-than-expected print could put some pressure on the front end of the Treasury curve. "But broadly speaking, the market remains aligned with the Federal Reserve's patient stance," Sanders says. Analysts in a Wall Street Journal poll expect month-on-month headline and core CPI to accelerate. ([email protected])0550 GMT - Ten-year U.S. Treasury yields are set to rise in the next three to six months as inflation and deficit concerns overtake growth worries, ING rates strategists say in a note. "Despite the tariff roller-coaster of the past six weeks, we've ultimately landed in a place where the prior macro worries have now been materially lowered," they say. Given that, they see a latch back on to an elevated inflation and fiscal deficit combination that can worry U.S. Treasurys and mute U.S. interest-rate cut expectations. The strategists expect the 10-year Treasury yield to head for the 4.50%-4.75% area, with a risk that it could touch 5%, they say. The 10-year Treasury yield, which rose 8 basis points on Monday, is unchanged at 4.457%, according to Tradeweb. ([email protected])0536 GMT - Investors remain nervous about the U.S. Treasury market's safe haven status, despite the easing of recent market volatility, says rates strategists at TD Securities. In the backdrop is investor concern surrounding the direction of U.S. finances. "This could lead to further term premium increases, a steeper curve, increased worries about Treasury auctions, and a possible ratings downgrade," they say. TD Securities expects the Treasury curve to steepen further--meaning a widening gap between short- and long-dated bond yields. The U.S. Treasury is likely to take steps to keep financing costs lower, leaning more heavily on Treasury bill supply in the next several years and possibly even trimming long-end auction sizes, the strategists say. ([email protected])