Bitcoin Rises, Recovering After Recent Falls — Market Talk

1028 GMT - Bitcoin rises, recovering from recent falls. Falls in equities amid trade-policy uncertainties help to lift the cryptocurrency. However, market positioning suggests that crypto assets aren't receiving a big lift from risk aversion, Saxo analysts say. Instead, the current rise reflects a "reset" after falls late last week and over the weekend, when bitcoin fell to its lowest in nearly two weeks. Bitcoin is last up 0.4% at $105,313, having earlier hit a 5-day high of $106,547, LSEG data show. ([email protected])1015 GMT - U.S. Treasury yields continue falling in European midday trade. Overnight falls were driven by declines in Japanese government bond yields after an auction of 10-year bonds in Japan attracted strong demand. During European trade, weaker-than-expected flash estimate eurozone inflation data for May helped to keep yields lower. Eurozone annual inflation fell more than expected to 1.9% in May, down from 2.2% in April. This took it below the European Central Bank's inflation target. The 10-year Treasury yield falls 4.5 basis points to last trade at 4.416%, Tradeweb data show. ([email protected])1002 GMT - Money markets show investors marginally increase expectations for an interest-rate cut by the European Central Bank in July after weaker-than-expected flash eurozone inflation data for May. A 25 basis-point rate cut on Thursday is fully expected. Markets now price a 31% chance of an additional rate cut in July, up from 28% beforehand, LSEG data show. The next rate cut is not fully priced in until October or December, however. Eurozone annual headline inflation fell more than forecast to 1.9% in May from 2.2% in April. ([email protected])0943 GMT - The euro edges lower after data showed annual eurozone inflation fell more than forecast to 1.9% in May from 2.2% in April. This takes inflation below the European Central Bank's 2.0% target for the first time since September 2024. The ECB is already expected to cut interest rates at its decision on Thursday but these figures could increase prospects of another rate cut after that. The euro falls to a low for the day of $1.1399, according to LSEG data, from around $1.1414 beforehand. Ten-year Bund yields show little reaction but remain lower on the day, last down 1.5 basis points at 2.502%, Tradeweb data show. ([email protected])0923 GMT - Falling eurozone inflation paves the way for an economic rebound in the 20-member currency area, MHA economic advisor Joe Nellis writes in a note. Annual inflation fell below 2% last month, helped by a sharp decrease in the rate of services inflation from a month earlier, figures show Tuesday. Accompanied by a series of interest-rate cuts and a stronger euro, easing inflation points to a "successful year of monetary policymaking" on the part of the European Central Bank, Nellis says. "Even if the European economy has not yet picked up as hoped... they have set the foundations for economic growth, put the inflation issue to bed, and appear to have returned normalcy to the economy," he says. ([email protected]; @joshualeokirby)0908 GMT - U.K. water company Thames Water will have to find alternative ways to finance its troubled business after U.S. private equity company KKR pulled out of plans to invest in the company, ING's Nadege Tillier says in a note. "This decision puts Thames Water in a very difficult position, as it now needs to find other ways to recapitalize the business," she says. Thames Water will continue discussions with senior creditors on restructuring debt, it said in a statement. ([email protected])0849 GMT - Yields on U.K. government bonds, or gilts, fall, tracking moves in their eurozone counterparts. Risk-averse investors turn to safer assets amid trade-policy uncertainties and worsening economic data, including Monday's weak U.S. ISM manufacturing survey for May. "For now, inflation and stagflation fears are not weighing on global bond markets," says XTB analyst Kathleen Brooks. Gilts are also helped after an earlier auction of Japanese 10-year bonds saw strong demand and ahead of a sale of gilts maturing in 2063 at 0900 GMT. The 10-year gilt yield falls 3 basis points to 4.618%, Tradeweb data show. ([email protected])0800 GMT - Gold futures slide, paring some gains made in Monday's strong rally but remain at elevated levels amid renewed trade concerns. Futures slide 0.4% to $3,383.50 a troy ounce, having reached as high as $3,417.80/oz in the prior session. The precious metal's safe-haven characteristics have been supported by renewed trade worries and heightened geopolitical tensions, ING analysts say in a note. China has accused the U.S. of violating a recent trade agreement after President Trump made similar accusations last week. Trump has also threatened steel and aluminum tariffs would be doubled to 50% from Wednesday, prompting Canada and the European Union to say they would retaliate, ING says. At the same time, gold has been supported by rising geopolitical tensions after Ukraine staged a series of drone attacks against Russia, reinforcing gold's safe-asset status, ING adds. ([email protected])0755 GMT - A cut to Turkish interest rates this month isn't out of the question, Capital Economics' Nicholas Farr says. Annual inflation in Turkey eased close to 35% in May from around 38% in April, a bigger fall than economists had forecast, figures show Tuesday. That should increase the central bank's confidence that it can start lowering borrowing costs soon, Farr says. Policymakers began cutting interest rates at the end of the last year but in April they were forced to hike the policy rate back up to 46% in response to market jitters that hit the Turkish lira. Capital Economics previously expected rate cuts would resume in the third quarter but a reduction this month is now possible, Farr writes in a note. ([email protected]; @joshualeokirby)0741 GMT - Indonesia's central bank may find an opportunity to cut its policy rate by another 25bp this month, following its easing in May, if the USD/IDR remains broadly stable or declines, Barclays economists say. This would bring the policy rate to 5.25%, say Brian Tan and Hongying Liu in a note. They expect two more 25bp cuts in 3Q and 4Q and don't see an earlier easing as surprising, given Bank Indonesia's sensitivity to forex volatility. The sharp drop in April's trade surplus is unlikely to deter easing, as BI appears less concerned about the current account in this cycle, they add. Past trade deficits influenced BI more during tightening phases, Barclays notes. ([email protected])0738 GMT - The U.K. Debt Management Office's sale of 1.25 billion pounds ($1.69 billion) in October 2063 gilts on Tuesday is likely to see demand as the amount on sale is small by historical standards, analysts at RBC Capital Markets say in a note. There are no further scheduled auctions of this bond in the next quarter, which should also support demand at the auction, the analysts say. ([email protected])0717 GMT - The dollar edges higher, recovering after falling to its lowest in six weeks against a basket of currencies and against the euro at the start of the week. However, weak U.S. JOLTS job openings and durable goods orders, due at 1400 GMT, could send the U.S. currency lower again, ING's Francesco Pesole says in a note. "Another round of soft data, particularly in the labor market, can push the dollar back to its April lows," he says. Any renewed increase in U.S. government-bond yields would push the dollar lower still, he says. The DXY dollar index rises 0.1% to 98.854, having hit a six-week low of 98.583 overnight. Ten-year Treasury yields fall 4 basis points to 4.418%, according to Tradeweb. ([email protected])