Bitcoin Pulls Back From Recent Gains Even as Senate Advances Crypto Bill — Market Talk

0838 GMT - Bitcoin eases after hitting a nearly four-month high on Monday when the Senate voted to advance landmark cryptocurrency legislation. The GENIUS Act would establish the first regulatory framework for issuers of stablecoins, which are digital assets pegged to currencies like the dollar. The Senate voted 66-32 Monday evening to advance the bill, less than two weeks after Senate Democrats rejected it. Optimism over the legislation provided a brief boost to bitcoin but the cryptocurrency has pulled back as risk sentiment remains cautious amid uncertainty over U.S. tariffs and in the wake of the Moody's Ratings downgrade to U.S. sovereign debt. Bitcoin falls 0.3% to $105,179 after hitting a high of $107,060 Monday, according to LSEG. ([email protected])0828 GMT - The U.S. Treasury curve should price in higher term premia, or the extra yield premium investors demand to hold a long-dated bond over a short-dated bond, says Jefferies' Mohit Kumar in a note. "Our view remains that we should see a higher term premium along the U.S. curve," the global economist says. Jefferies continues to position for a steeper yield curve--a widening gap between short-dated and long-dated Treasury yields. Jefferies expects Treasurys to underperform relative to German Bunds. "Our favourite expression is to be underweight the long end of U.S. relative to the front end in Europe," he says. The 10-year Treasury yield falls nearly 4 basis points to 4.438%, while the 10-year Bund yield is down 1 basis point at 2.566%, according to Tradeweb. ([email protected])0807 GMT - Malaysia's sharp trade surplus drop in April signals a shift in trade patterns, with strong evidence of export rerouting through Malaysia, likely from China, Barclays analysts Brian Tan and Hongying Liu say in a note. While front-loading ahead of U.S. tariffs remains a factor, the spike in re-exports suggests domestic export momentum was flat, they say. Barclays expects a 25bp rate cut from Bank Negara Malaysia, bringing the policy rate to 2.75%, likely in July, though the risk of delay is higher. The central bank remains cautious following the U.S.-China trade deal, while a cut is still anticipated once the full impact of tariffs are reflected in GDP data, it adds. ([email protected])0800 GMT - European natural gas prices rise in early trade after a two-hour call between President Trump and Russian President Vladimir Putin ended without any major breakthrough. The benchmark Dutch TTF contract is up 1.4% at 35.72 euros a megawatt-hour. Russia failed to agree to an immediate cease-fire with Ukraine, but Trump said afterward that Moscow and Kyiv would resume direct talks on an agreement to halt the fighting. Meanwhile, some supply-side concerns persist. "In recent weeks, LNG cargoes have been diverted away from Asia amid a temporary slump in demand," according to ANZ Research. "However, new buyers are emerging, many of whom are uncontracted." This could drive increased demand for LNG imports into countries such as Thailand, Vietnam or the Philippines, analysts at the firm say. ([email protected])0752 GMT - Gold prices edge lower after rising more than 1% in the previous session as traders assess the latest developments in Ukrainian peace talks. In early trading, futures slip 0.5% to $3,224.80 a troy ounce, while the U.S. dollar index slightly recovered from Monday's lows. A call between President Trump and Russian President Vladimir Putin didn't seem to yield any major breakthroughs, but Trump said Moscow and Kyiv "will immediately start negotiations toward a ceasefire." Meanwhile, several Federal Reserve officials are scheduled to speak later on Tuesday, potentially offering more clarity on the central bank's policy outlook. Otherwise, the data calendar remains light ahead of the Memorial Day weekend.([email protected])0752 GMT - The U.K. Debt Management Office is likely to launch a new 30-year gilt maturing in January 2056 via syndication on Tuesday, RBC Capital Markets analysts say in a note. The syndication size is expected to be between four billion pounds ($5.3 billion) to five billion pounds, the analysts say. "Given the likely smaller size of this transaction, we think the new issue premium should be smaller than the recent average for 20-year to 30-year launches [at around 3.5 basis points to 4 basis points]," RBC says. The new issue premium is likely to be between 2.5 basis points and 3 basis points, the analysts say. ([email protected])0744 GMT - The post-Brexit agreement to reset U.K.-EU relations isn't a game changer for sterling but could prove mildly supportive for the currency this summer, ING's Chris Turner says in a note. More important this week will be Wednesday's U.K. inflation data and whether the services component is finally starting to fall, he says. Meanwhile, a speech from Bank of England chief economist Huw Pill at 0800 GMT could lift sterling given he dissented from this month's decision to cut interest rates by 25 basis points, preferring to keep rates unchanged. The U.K.-EU agreement, announced Monday, covers security, energy, travel, trade and fisheries. Sterling rises 0.1% to $1.3382 but falls against the euro, which is up 0.1% at 0.8423 pounds. ([email protected])0730 GMT - The Reserve Bank of Australia was more dovish than expected, Citi Research's Josh Williamson says in a research report. "The downside risks flagged to growth, particularly household consumption, were more than expected and the statement and the press conference were dovish," the economist says. There's now a risk for a RBA rate cut in July since the board considered a 50bp cut, Williamson says. However, Citi Research continues to see a terminal rate of 3.1% this year, with rate cuts in August, September and November. ([email protected])0726 GMT - The dollar is at risk of a prolonged period of weakness partly due to the U.S. twin deficit, Commerzbank analyst Antje Praefcke says in a note. Following the bursting of the dot-com bubble in the early 2000s, the dollar came under pressure for years as markets took a critical view of the large budget and trade deficit, she says. "I fear that the market could soon realize that we could be facing such a situation again." The U.S. continues to consume plenty of foreign goods so a reduction in the trade deficit looks unlikely. Tariffs won't plug holes in the budget deficit while planned spending cuts will be difficult to implement and rising Treasury yields could increase interest payments. ([email protected])0716 GMT - U.S. companies are increasingly issuing bonds in the euro credit market as it is cheaper than issuing in the dollar credit market, CreditSights analysts say in a note. "A mix of European Central Bank policy loosening and potential fiscal stimulus has positively reshaped the economic outlook for Europe," the analysts say. Investors favor euro-denominated credit to dollar-denominated credit, and U.S. borrowers have taken notice of the new trend, CreditSights says. ([email protected])0652 GMT - The U.K.-E.U. trade agreement signed on Monday is likely to support business investments in the U.K., Berenberg's Andrew Wishart says in a note. The deal is likely to "reassure corporates and investors that the direction of travel is toward closer integration of the U.K. and EU rather than further policy divergence." U.K. exports and business investments are expected to benefit from the agreement, Wishart says. ([email protected])0641 GMT - The British pound's upward trajectory against the U.S. dollar is aided by improved U.K.-EU relations, Sucden Financial's Daria Efanova says in commentary. Britain and the EU on Monday signed a deal to ease trade and bolster security cooperation, the head of research notes. Also, technical analysis indicates GBP/USD's robust position, with the currency pair staying above crucial moving averages, she says. GBP/USD's immediate outlook seems positive with potential for further gains toward 1.3400, Efanova says. However, market participants remain vigilant about coming U.K. CPI data and the data's impact on BOE policy expectations, she adds. GBP/USD is 0.1% higher at 1.3372. ([email protected])