Bitcoin Recovers as Rate Cut Bets Firm Ahead of Looming Fed Decision — Market Talk
0758 GMT - Bitcoin rises to a two-week high, recovering from Monday's sharp selloff as markets bet on another interest-rate cut by the Federal Reserve on December 10. Rate-cut bets firmed after President Trump said he would announce his choice for the next Fed Chair early next year and touted Kevin Hassett as a potential candidate. Hassett is expected to deliver on the president's calls for lower rates. The market is pricing a near 85% chance of a rate cut next week, LSEG data show. Bitcoin rises to a high of $93,965, according to LSEG. It suffered its worst day since March on Monday after Bank of Japan Gov. Kazuo Ueda strongly hinted at resuming rate rises on December 19. ([email protected])0757 GMT - The recent typhoons affecting Asia are likely to have a limited impact on its economies, Capital Economics' Gareth Leather says in a note. South and Southeast Asia have been hit hard by tropical storms, with production, commerce and supply chains disrupted in the short term, the senior Asia economist writes. The tourism sector will likely be affected as well. However, "once the worst of the disruption passes, a rebound often follows, aided by pent-up demand," Leather says. He notes that the region's main industrial and commercial centers have largely escaped the worst of the typhoon damage. The main economic risks are in the agriculture sector, as crop losses could push up food prices across the region.([email protected])0750 GMT - Steepeners--or trades betting on a widening gap between short- and long-dated bond yields--are set to be "the trade of choice" over the coming weeks in U.S. rates markets, says Jefferies' Mohit Kumar in a note. If President Trump picks a Federal Reserve Chair who favors rate cuts, this would be an impulse to steepener trades, the global economist says. "While the Fed can control the front end of the curve, worries around inflation driven by an easier monetary policy will keep pressure on the long end," Kumar says. A potential adverse Supreme Court ruling on tariffs could additionally dent revenue projections and raise fiscal concerns, he says.([email protected])0749 GMT - China's economic growth is likely to remain muted in 2026, according to Capital Economics' Zichun Huang in a research note. The decline in the November services PMI adds to evidence that the economy continued to lose momentum last month, with slower growth across both manufacturing and services, the China economist says. Huang expects economic growth to remain subdued, primarily because a recent appreciation in the trade-weighted yuan is likely to offset much of the boost expected from the U.S.-China trade truce. ([email protected])0745 GMT - The dollar falls after President Trump touted Kevin Hassett as a potential candidate for the next Federal Reserve Chair and as investors turn cautious ahead of U.S. jobs data. Trump said he would announce his pick for Fed Chair early next year and was considering Hassett, who is expected to favor lower interest rates. Meanwhile, the ADP private payrolls report is due at 1315 GMT. It takes on more importance than usual as no more official jobs data are due until after the Fed's December 10 decision due to the recent government shutdown. The market is currently pricing in an 84% chance of a rate cut this month, LSEG data show. The DXY dollar index falls 0.3% to 99.113. ([email protected])0713 GMT - The Bank of Thailand is likely to cut its policy rate by 25 bps later this month, but it is still a close call, Barclays economists write in a note. Headline CPI fell 0.49% on year in November, which is at a slower pace than October's 0.76% contraction. However, the BOT will look at Thailand's economic growth outlook, and not inflation data, to consider monetary easing. Economic data doesn't show clear indications of a gradual 4Q recovery, as expected by BOT's monetary policy committee. Recent floods in the Southern provinces could also weigh on trade and transport, they say.([email protected])0704 GMT - The cheapening dynamic in German Bunds is calming down, with a new anchor level found at 2.75% for the 10-year Bund yield, Commerzbank Research's Erik Liem says in a note. "After taking out the 2.75% earlier this week, this level served as an anchor, with 10-year Bund yields hovering in a tight range close to it," the rates strategist says. The German Finance Agency has completed its annual bond funding program for 2025, thus Bunds do not face any near term pressure from domestic supply. However, as usual towards the end of the year, investors await the release of the Finance Agency's annual funding program which is expected to show an increase in gross supply in 2026 as Germany finances its fiscal expansion. ([email protected])0656 GMT - Norway is set to complete its 2025 government bond issuance program on Wednesday, auctioning 2 billion Norwegian kroner in 2029- and 2034-dated bonds. "This is the last [Norwegian] auction in 2025, and Norges Bank will have sold 105 billion kroner in total, which is in the top of the issuance range," Danske Bank analyst Kirstine Kundby-Nielsen says in a note. For 2025, Norges Bank targeted government bond issuance of 95 billion-105 billion kroner. There has been solid demand for the 2029-dated bond at previous auctions. The bond has also looked cheap given Danske's expectations for more than two rate cuts in 2026, Kundby-Nielsen says. Norway will publish the borrowing program for 2026 on Dec. 12. ([email protected])0639 GMT - U.S. Treasury yields trade marginally lower in Asian afternoon hours as investors take a cautious stance ahead of ADP employment and ISM services data. "While services PMI figures are due from pretty much everywhere, it will be last month's U.S. ISM survey that steals the lion's share of participants' attention, not least after the disappointing ISM manufacturing read on Monday," says Pepperstone's Michael Brown in a note. The two-year Treasury yield falls 1.6 basis points to 3.499%, while the 10-year Treasury yield is down 0.9 basis points at 4.078%, according to Tradeweb. ([email protected])0633 GMT - Barclays expects the market to price in a higher inflation risk premium for U.S. inflation-protected securities, or TIPS, in 2026, says strategist Jonathan Hill in a note. Barclays' preferred expression of this key trade is through longs in 10-year breakevens, he says. In essence, at first pass, the market is priced for at-or-below levels consistent with the Federal Reserve's 2% inflation target, and reflect little to no positive inflation risk premium, he says. "Given the absence of apparent upside inflation risk premium priced into the market despite several notable potential catalysts on the horizon, we see long breakeven positioning warranted," he says. ([email protected])0628 GMT - Government bond yield curves in the eurozone are expected to steepen, Metzler analyst Leon Ferdinand Bost says in a note. Two-year German bond yields suggest a terminal rate by the European Central Bank rate at 2% but Metzler believes that the market underestimates the probability of an ECB rate cut, "as we see both growth and inflation risks tilted to the downside," the analyst says. Meanwhile, 10-year Bund yields are expected to face upward pressure from the second quarter onward, driven by the German fiscal package, driving the 10-year Bund yield to 2.80% by end-2026. Metzler's forecast is only slightly above Tuesday's close of 2.749%. However, it will rise from around 2.50% in the first quarter, a level expected to be reached partly due to an ECB rate cut. ([email protected])0619 GMT - Australian economists are weighing up what strong demand growth in the 3Q GDP data on Wednesday means for interest rates. Many are considering calls that an increase in rates might be needed in the first half of next year. Some are even kicking around the idea that February could see the Reserve Bank of Australia take back one of the cuts it has delivered since February this year. George Tharenou, chief economist at UBS, says the RBA might wait until the end of next year to hike, but he admits the balance of risks is shifting to a hike somewhere around midyear. "The GDP data provided inflation signals on wages and unit labor costs, which if anything, would concern the RBA," he says. ([email protected]; X @JamesGlynnWSJ)