Bitcoin Stays Under Pressure After Hitting Near 7-Week Low — Market Talk
0740 GMT - Bitcoin stays under pressure after hitting a nearly seven-week low in the previous session. The cryptocurrency has continued to consolidate from the record high reached earlier in August. It briefly recovered after Federal Reserve Chair Jerome Powell signalled interest-rate cuts could resume shortly, boosting risky assets. However, it has since retreated with crypto news outlets attributing the decline to a bitcoin whale--an investor with large holdings of the cryptocurrency--offloading the asset. Bitcoin falls 0.5% to $110,852 after hitting a low of $108,829 Tuesday, LSEG data show. It reached an all-time high of $124,480 on August 14.([email protected])0733 GMT - The March 2028 gilt trades cheap as yields on the bond have risen from 3.834% on August 1 to 4.024% currently, Tradeweb data show. The cheap valuation is likely to support the gilt when it is auctioned at 0900 GMT, RBC Capital Markets strategists say in a note. Wednesday's sale could be the final tap of the bond, before a new 3-year benchmark bond is launched, the strategists say. ([email protected])0725 GMT - The euro could correct lower after recent gains against the dollar due to eurozone debt concerns, Commerzbank's Antje Praefcke says in a note. French Prime Minister Francois Bayrou's government is expected to be toppled in a confidence vote next month over its plans to cut the budget deficit. This highlights how the euro could weaken if euro-area debt gets out of hand, Praefcke says. If vulnerable eurozone countries fail to implement reforms, this could increase pressure on the EU to take on joint debt and on the European Central Bank to push down yields through additional bond purchases and/or a lower interest rates. "That, in turn, would be negative for the euro." The euro falls 0.2% to $1.1616. ([email protected])0709 GMT - The mood among German consumers is getting uglier, offering little hope of an economic recovery powered by household spending, Claus Vistesen at Pantheon Macroeconomics warns. A forecast of sentiment among German consumers compiled by GfK slipped to minus 23.6 for September, furthering a trend of weaker confidence as Europe's largest economy struggles to gain traction. "This is a warning shot for consumer spending," though a major consumption boom was never likely anyway, Vistesen says. ([email protected]; @joshualeokirby)0641 GMT - The dollar recovers marginally but lingering concerns about the Federal Reserve's independence keep the currency at weaker levels. President Trump said on Monday he would fire Federal Reserve Governor Lisa Cook effective immediately over allegations of mortgage fraud. Cook is suing Trump with her attorney saying the claims lack any factual or legal basis. Trump's move raises fresh worries about the Fed's independence as the president puts pressure on the central bank to cut interest rates. If Cook were replaced, the majority of the Fed's board could be in favor of rate cuts following the appointment of Trump ally Stephen Miran, Deutsche Bank analysts say in a note. The DXY dollar index rises 0.2% to 98.392, having fallen as low as 98.085 on Tuesday, LSEG data show. ([email protected])0627 GMT - This week's surge in French political risk doesn't bode well for the coming rating reviews from Fitch Ratings on Sept. 12, Moody's Ratings on Oct. 24, and S&P Global Ratings on Nov. 28, Citi's rates strategists say in a note. "All three ratings are at AA- and any downgrade would take France to the single-A tier," they say. On Monday, French Prime Minister Francois Bayrou called a confidence vote for Sept. 8, as his administration struggles to gain support for deep spending cuts. The 10-year French OAT yield is flat at 3.498%, while the 10-year German Bund yield is up 0.3 basis point at 2.727%, according to Tradeweb. ([email protected])0618 GMT - Shares in French banks sold off after the country's prime minister called a confidence vote, pushing government bond yields up and weighing on the sector. Equity investors bid up bank's cost of equity on fears of political instability and a potential sovereign-credit downgrade, Jefferies analysts Joseph Dickerson and Theo Massing write. "We see this as more of a cost of equity issue near term, given this is a prospective economic growth matter more than anything else," they say. A government collapse could lead to economic players taking a wait-and-see approach toward France with focus shifting back to the country's fiscal trajectory if the 2026 budget fails to pass. "This approach has already been factored into allocation decisions following the events of last summer," they say, referring to a previous political crisis. ([email protected])0609 GMT - Tariff-related pressure on Asia-Pacific companies' credit quality is expected to intensify in the coming quarters, S&P Global Ratings says. About 12% of rated Asia-Pacific issuers face material tariff-related impact, with roughly 40% of that group carrying a negative outlook, credit analyst Simon Wong says. The auto sector faces the most direct tariff impact, while chemicals and metals-and-mining companies are most exposed to indirect effects, he notes. "While the latest U.S. tariff differential among Asia-Pacific countries has narrowed, we believe trade flows and supply chains will continue to reshape," Wong says. "This presents a category of risk in itself." ([email protected])0606 GMT - U.S. Treasury yields rise in Asian trade, reversing Tuesday's falls which came after President Trump's move to fire Federal Reserve governor Lisa Cook on alleged fraudulent information on mortgage applications. "Markets fear that if Trump succeeds in ousting Cook--and he has often tested limits successfully--he could tilt decision-making at the Fed in his favour, indirectly influencing policy," says Swissquote Bank's Ipek Ozkardeskaya in a note. Wednesday's potential Treasury drivers include a $70 billion auction of five-year notes, while the U.S. data calendar is light ahead of key indicators Thursday and Friday. The two-year Treasury yield rises 1.8 basis points to 3.661%; the 10-year yield is up 1.7 basis points at 4.272%, while the 30-year yield is up 1.6 basis points at 4.924%, according to Tradeweb. ([email protected])0552 GMT - The fact that the Federal Reserve's flexible average inflation targeting is gone matters, because the Fed will view potential deviations from targets in a different manner under the new policy framework, says MFS Investment Management's Benoit Anne in a note. No more averaging and it means that potentially the Fed may have to be a bit more reactive under certain circumstances, the head of MFS IM's market insights group says. The other important consideration that is covered by the new policy strategy is that the relative importance of the employment mandate appears to have been upgraded, he says. ([email protected])0548 GMT - UBS lowers its long U.S. five-year Treasury yield target to 3.60% from 3.70% previously, following the Federal Reserve's Jackson Hole Symposium, strategist Reinout De Bock says in a note. UBS, meanwhile, is looking for a better entry point, he says. "[We] are waiting for better entry points to go long the front-end ahead of the release of the August jobs report on Friday, September 5," the strategist says. The five-year Treasury yield rises 1.7 basis points to 3.754%, according to LSEG. The new stop level to the trade is 3.90%. ([email protected])0543 GMT - September looks like the last chance for the European Central Bank to lower interest rates in the eurozone, Pantheon Macroeconomics' Claus Vistesen and Melanie Debono write in a note. The bank at its last meeting in July held its key rate at 2.00%, and investors now mostly expect the governing council to keep its hands off the scissors and next month's meeting in Frankfurt. That could change if consumer-price inflation proves weaker than expected in August, Vistesen and Debono say, with figures for eurozone CPI due to be released next week. Inflation is meanwhile likely to spike further ahead as energy and good prices gain pace, the economists say." The window for further easing this year will slam shut as inflation rebounds from September," they say. ([email protected]; @joshualeokirby)