Bitcoin's High Price Bodes Well for Crypto, Boosts Demand for Ethereum — Market Talk

1155 GMT - Bitcoin trading back above $100,000 is helping to solidify investor confidence, says LMAX Group's Joel Kruger in a note. It is inspiring additional demand for exposure to the broader asset class, the market strategist says, noting the resurgence in the price of Ethereum. Ethereum has rallied more than 30% already month-to-date. With that it has outperformed all other crypto and major traditional assets over this time horizon, Kruger says. Bitcoin rises 0.4% to $103,035, having hit a high of $104,324.39, LSEG data show. The price of Ethereum jumps 7.6% to $2347.87, having hit a three-month high of $2486.25. ([email protected])1148 GMT - The euro-denominated corporate bonds market stabilized towards the end of April as investor demand returned following weak activity in early April after the U.S. announced global tariffs, LBBW senior credit analyst Matthias Schell says in a note. Companies issued 25 billion euro ($28 billion) in euro corporate bonds in the last three days of April, receiving on average 3.6 times subscription on the volume of new issues, Schell says. "The strong catch-up effect at the end of April indicates a successful normalization of the market after the tariff shock."([email protected])1045 GMT - At 4.2% unemployment, the U.S. labor market is likely near the Federal Reserve's maximum-unemployment goal, Fed governor Adriana Kugler says. Speaking at an economics conference in Reykjavik, Iceland, Kugler discusses a variety of models that economists use to estimate maximum employment, a concept that describes the highest level of employment an economy can sustain without inflationary pressures. Two approaches--one that aims to estimate the socially efficient level of employment, and another that uses a demographic approach--both suggest that maximum unemployment is now around 4.2%. Another approach, using the Phillips curve, could also be consistent with maximum employment below 5% depending on the precise details, Kugler says. " I judge the labor market to be stable," Kugler says according to a published text. "Most likely, the labor market is also close to maximum employment." ([email protected]; @mattgrossman)1017 GMT - Euro investment-grade corporate bonds remain more attractive than their sovereign bond equivalents as economic uncertainty remains high, LBBW credit analysts say in a note. Higher risk of widening Bund spreads, due to increased geopolitical and economic uncertainty, has lowered "the absolute performance potential for euro IG Corporates," the analysts say. Nonetheless, euro IG corporate bonds still provide an attractive risk-return balance, LBBW says. ([email protected])1006 GMT - Crude prices extend gains in midday trade, supported by optimism surrounding global trade talks and fresh U.S. sanctions on Iran's oil exports. Brent rises 1.6% to $63.83 a barrel, while WTI is up 1.7% to $60.92 a barrel. The U.S. Treasury Department sanctioned a third Chinese independent refinery over purchases of Iranian oil, signaling continued pressure on Tehran ahead of an expected fourth round of nuclear talks. The move contributed to a rise in crude prices at a time when investor sentiment has already improved ahead of U.S.-China talks. However, concerns over the demand outlook persist. Kazakhstan reportedly said it has no plans to cut oil output in May, increasing the chances of another accelerated production hike from the OPEC+ group in July. ([email protected])1003 GMT - BlueBay Asset Management says investors should avoid premature optimism due to trade-deal prospects and warns of risks that U.S. Treasury yields could rise. "We feel that financial markets have been too ready to buy into a narrative that Trump's April pivot means that the administration has changed course and is now more focussed on a pragmatic deal-making path," CIO Mark Dowding in a note. BlueBay has a fair value estimate for 10-year U.S. Treasury yields at around 4.50% and retains a neutral duration view for the time being. Following a more benign period, BlueBay expects further problems ahead. It has therefore added hedges to risk assets. The 10-year Treasury yield trades steady at 4.375%, according to Tradeweb. ([email protected])0926 GMT - China's export growth will likely continue to weaken in coming months as tariffs on China may remain elevated, Morgan Stanley analysts write in a note. The coming trade talks between senior U.S. and China officials will likely reduce the current prohibitive tariff rates to more manageable levels, they say. The brokerage continues to expect front-loading of NPC-approved stimulus in the near term, followed by CNY1 trillion-CNY1.5 trillion fiscal expansion in 2H, they say. Front-running of exports rerouting partly offset a sharp decline in exports to the U.S., sustaining resilient export growth for China in April, they say. ([email protected]; @ivy_jiahuihuang)0922 GMT - The cost of insuring euro-denominated credit against default using credit default swaps falls as optimism rises following a trade agreement between the U.S. and the U.K. this week and expectations of better trade relations between the U.S. and China. "There is an air of optimism that we could see additional deals come to fruition around the globe," Scope Markets' Joshua Mahony says in a note. The iTraxx Europe Crossover index which tracks euro junk bond credit default swaps falls 4 basis points to 317bps, a six-week low, S&P Global Market Intelligence data show. The iTraxx Europe Main index which tracks euro investment-grade CDS declines 1bp to 61bps. ([email protected])0838 GMT - Sterling is expected to strengthen against the euro, supported by an improving U.K. trade outlook after trade deals were sealed with the U.S. and India, ING forex strategist Francesco Pesole says in a note. Investors are now optimistic about talks with the EU, which would have "much more meaningful implications for the U.K., and can lend a hand to troubled British finances," Pesole says. Additionally, the Bank of England this week cut interest rates but indicated future rate cuts would likely be gradual, also supporting sterling, he says. The euro is steady at 0.8482 pence, having hit a one-month low of 0.8458 pence late Thursday. ING expects sterling could appreciate to 0.8400 per euro in the coming weeks. ([email protected])0828 GMT - The U.S.-U.K. trade deal, even if it's an agreement in principle, is what the markets were looking to see, Northlight Asset Management chief investment officer Chris Zaccarelli says in a note. Markets showed how much they disapproved of punitive tariffs at the start of April, and a week later demonstrated how they would receive a more measured approach. "While trade with the U.K. pales in comparison to trade with [the U.S.'s] neighbors to the north and south, and especially in comparison to China, it is an important test case and a model for what could be accomplished," he says. If the Trump administration follows up with additional agreements, it would go a long way toward healing a bruised stock market, he adds. ([email protected])0827 GMT - Rising market expectations of a trade deal between China and the U.S. argue for a stronger dollar, says Danske Bank Research's Jens Peter Sorensen. "Near-term we acknowledge that the environment is supportive of the trimming of dollar shorts," the director for fixed income and forex research says. The long-term outlook for the dollar is less positive, though. "Longer-term we maintain the view that the last months' developments all hint at gravitational forces having shifted for EUR/USD," he says. Danske Bank Research sticks to a buy-on-dips strategy. The DXY dollar index falls 0.2% lower at 100.442 after hitting a one-month high of 100.862 overnight. ([email protected])0822 GMT - Eurozone government bond yields rise, propelled as the U.K.-U.S. trade agreement boosts optimism about prospects of an EU-U.S. deal, in turn causing investors to turn to riskier assets such as stocks. Ten-year eurozone government bond yields rise by up to 7-8 basis points across the board. The 10-year Bund yield is up 7 basis points at 2.585%, according to Tradeweb. "The first trade deal, a split Bank of England, a patient Federal Reserve, and a market wanting to take less bad news on tariffs as good news may add up to a near-term pause in the front-end [short-dated bond] rally," Citi Research's rates strategists say in a note. ([email protected])