Bitcoin Rises as Risk Sentiment Improves — Market Talk
0716 GMT - Bitcoin rises as news that President Trump would delay a decision on U.S. involvement in the Israel-Iran conflict improves risk sentiment. The White House said Trump would make a decision within the next two weeks. "Prior to this, several sources had pointed to a U.S. strike on Iran possibly happening as soon as this weekend which led to a risk-off mood yesterday in the quiet U.S.-holiday influenced session," Deutsche Bank analysts say in a note. Hence, the latest news should reduce the event risk ahead of the weekend, they say. Bitcoin rises 0.4% to $104,709, according to LSEG. ([email protected])0711 GMT - A slump in Britain's retail sales last month can in part be put down to the timing of Easter and the unusually good early springtime weather, Rob Wood and Elliott Jordan-Doak at Pantheon Macroeconomics write in a note. Volumes dropped by 2.7% in May, the fastest monthly decline in close to 18 months, figures from the U.K. statistics agency show Friday. But much of that volatility can be pinned to the Easter holiday, which this year fell late in April and is to blame for the 5% drop in food-store sales, "down from the Easter Egg-fuelled 4.7% jump in April," Wood and Jordan-Doak note. Early home-improvement work, as homeowners made the most of sunny weather in March and April, meanwhile helps explain the drop in sales of household goods in May, they say. "We think the underlying upward trend of consumer spending growth will resume in June," they add. ([email protected]; @joshualeokirby)0704 GMT - Eurozone government bond spreads over Bunds generally remain at historically tight levels, but the room for further narrowing is limited near term, ING's Benjamin Schroeder says in a note. "The appetite for aggressive tightening positions at such levels will be limited going into a typically less liquid and more volatile summer period," the senior rates strategist says. In addition, uncertainties around geopolitics and trade relations with key dates are still coming up, he says. ([email protected])0656 GMT - The dollar falls after the Trump administration signaled it would delay a decision to launch strikes against Iran. The White House said Trump would make a decision on any U.S. involvement in the Israel-Iran conflict within the next two weeks. The news eases immediate fears of U.S. military escalation, providing some relief to investors, IG analysts say in a note. That reduces safe-haven flows to the dollar. Lower oil prices on the news also dents the dollar as the U.S. is a major oil producer and it boosts the prospect of the Federal Reserve cutting interest rates. The DXY dollar index falls 0.3% to 98.658, having reached a one-week high of 99.157 Thursday. ([email protected])0653 GMT - Eurozone peripheral government bonds become more attractive in Citi's global asset allocation in June versus German Bunds due to better economic prospects. "The European periphery replaces our longstanding Bunds overweight [initiated on March 31]," they say in a note. "Improving economic trends in Europe suggest a further spread tightening of the periphery versus Bunds," they say. With Citi's model signaling long Italian BTPs, Citi decides to flip Bunds overweight to a BTP overweight. The 10-year BTP yield is trading at 3.502%, down 4 bps, while the 10-year Bund yield falls 2.4 bps to last trade at 2.492%, according to Tradeweb. ([email protected])0645 GMT - Signs are gathering that the U.K.'s strong start to 2025 is over, Capital Economics' Paul Dales writes in a note. Retail sales fell more sharply than expected in May, figures show Friday, with volumes dropping at their fastest rate since December 2023. That wipes out the gains in sales made in the first months of the year, which contributed to a surprisingly robust growth rate in the first quarter. Consumer spending may still outperform other sectors of the economy this year, Dales says, pointing to improvements in consumer sentiment. "But it looks like GDP in the second quarter was pretty soft," he says.([email protected]; @joshualeokirby)0642 GMT - Taiwan's central bank is unlikely to cut interest rates this year, as economic growth will likely exceed expectations, Capital Economics economist Shivaan Tandon says in a research note. Although the boost from front-loading on exports should reverse soon, the economist says the AI-fueled growth will likely continue and should more than offset the drag from tariffs. CE expects Taiwan 2025 GDP to grow 5.2% compared with the central bank's forecast of 3.05%. Meanwhile, despite the strength of the economy, price pressures in Taiwan have continued to ease, largely because of rapid productivity gains, he says. CE expects this trend to continue as the central bank revised down its inflation forecast for 2025. ([email protected])0628 GMT - Sterling falls against the euro and pares gains versus the dollar after U.K. retail sales data came in much weaker than expected. Retail sales fell 2.7% month-on-month in May. Economists in a WSJ survey expected a 0.6% decline. It follows an upwardly revised 1.3% increase in April. "Despite two bank holidays and the warm weather, spending failed to kick start in May as consumers tightened their purse strings amid resurging inflation, April utility bills rises and poor labour market conditions," Ebury's Phil Monkhouse says in a note. The euro rises 0.1% to an intraday high of 0.8548 pounds, compared to 0.8539 before the data. Against a weaker dollar, sterling rises 0.1% to $1.3479, versus $1.3494 before the data.([email protected])0624 GMT - Japanese government bond yields are little changed in Asian afternoon trade, as the Ministry of Finance is set to discuss JGB issuance. Markets are speculating that it could weigh reducing volumes of 20-, 30- and 40-year JGBs and boosting supply of two-year bonds. The MOF is scheduled to meet primary dealers later in the day and institutional investors on Monday. The recent spike in ultra-long JGB yields amid fading demand from institutional investors, in particular life insurance companies, has raised speculation about tweaks in supply. The two-year JGB yield is up 0.4 basis point at 0.721%; the 10-year JGB yield is down 1.5 basis points at 1.399%; the 30-year JGB yield is flat at 2.905%, according to LSEG. ([email protected])0553 GMT - Malaysia's unexpected drop in May exports, led by a sharp fall in re-exports and still-soft domestic shipments, adds pressure on Bank Negara to cut its policy rate by 25 bps in July, according to Barclays economists Brian Tan and Hongying Liu in a note. While they maintain July as the base case for the first rate cut in this cycle, they caution the decision remains a close call, with a high risk of delay to September. The sharp deterioration in exports may be enough to nudge BNM into action, following its earlier 100bps statutory reserve requirement cut, but much depends on whether growth concerns intensify, they add. ([email protected])0552 GMT - Citi Research is neutral on German Bunds, forecasting the 10-year yield at 2.5% on average in the second half of the year, its rates strategists say. However, they have a preference to buy in phases of weakness, rather than selling the rallies, they say in a note. "Apart from the offsetting shocks of March/April, the calendar month changes in 10-year Bunds this year have all been below 10 basis points," they say. Bunds are taking punches but essentially standing still, the strategists say, expecting this to persist for the second half of 2025. The 10-year Bund yield closed at 2.522% on Thursday, according to Tradeweb. ([email protected])0549 GMT - Malaysia's trade momentum could weaken in the months ahead as the effects of front-loading activities fades, RHB senior economist Chin Yee Sian says in a note. That will particularly affect sectors like electronics & electrical products, and machinery. While Malaysia's trade negotiations with the U.S. are progressing, the end of the pause to so-called reciprocal tariffs is around the corner, she notes. Risks may rise if the July 8 deadline comes and a trade deal hasn't been reached, meaning Malaysia could face a tariff of 24% in its exports to the U.S. Chin stays cautious on the outlook for Malaysia trade. However, the country's diversification efforts and neutral stance on geopolitical matters could offer some resilience, she adds. ([email protected])