Bitcoin Stays Higher After Unexpected Fall in U.S. Nonfarm Payrolls — Market Talk

0854 ET - Bitcoin stays higher after weaker-than-expected U.S. nonfarm payrolls data reduced expectations for an interest-rate rise from the Federal Reserve at the September meeting. Payrolls fell 23,000 in July, whereas economists in a WSJ survey expected an increase of 83,000. The unemployment rate unexpectedly fell to 4.1% in July from 4.2% in June although average hourly earnings rose 3.15%, below an expected 3.5%. Markets now only price a 39% chance of a September rate increase compared to 56% before the data, according to LSEG. Bitcoin rises 1.2% to $65,134, staying near the one-week high of $65,223 reached before the data. ([email protected])0852 ET - U.S. stock futures are climbing after the July jobs growth badly misses estimates. Payrolls fall by 23,000 as the jobless rate edges down to 4.1% from 4.2%. The WSJ consensus was for a gain of 83,000 jobs with the jobless rate remaining at 4.2%. Employment in local government education declined by 50,000 in July, after showing little net change over the prior 12 months. Retail trade lost 19,000 jobs. Employment declined 21,000 in warehouse clubs, supercenters, and other general merchandise retailers. Gasoline stations and fuel dealers lost 5,000 jobs. The payroll weakness may spur speculation that the Fed will be less inclined to raise rates as it looks to support the labor market. S&P futures are up 41 points. ([email protected])0839 ET - Despite the 0.2% rise in output in June, German industrial production is still moving sideways at a low level, Commerzbank economist Marco Wagner says in a note. Data released earlier this week showed that, excluding large orders that are volatile on a monthly basis, manufacturing orders returned to their sideways trend after a brief upward breakout, he says. Due to low water levels in the River Rhine, the situation is unlikely to change over the summer. Any recovery after that will be slow, as Middle East developments stabilize and river levels rebound, Wagner says. However, the global economy is growing, from which German industry should also benefit, as it will from the government's continuing investment in defense and infrastructure projects, he says. ([email protected])0836 ET - Euro-denominated investment-grade bonds look attractive due to their favorable risk-return balance, LBBW's credit analysts say in a note. These bonds are "a good middle ground between the higher risks associated with high-yield bonds and the lower yields on German government bonds," the analysts say. ([email protected])0828 ET - The Hungarian forint briefly falls to a three-month low against the euro after data showed Hungary's inflation eased in July to the lowest level since late 2016. Annual inflation slowed to 1.2% in July from 1.7% in June. This was lower than market expectations and makes an interest-rate cut by Hungary's central bank look a done deal at the August 25 meeting, ING economists say in note. "Unless we see another wave of global energy price shocks, the rate-cutting cycle will almost certainly continue through autumn." ING expects the base rate to reach 4.75% by year-end from 5.75% currently. The euro rises 0.4% to 364.57 forints after rising as high as 367.39 earlier. ([email protected])0757 ET - Growth in German exports in the first half of the year is an economic bright spot, says DIHK foreign trade chief Volker Treier. Exports increased by 0.9% on month in June, while they jumped 3.7% in the first half of the year. However, it's too early for the economic all-clear, Treier says. "Industrial production in this country is stagnating. The outlook for world trade remains bleak." The weakness of consumption in China and growing competition from Chinese suppliers put significant pressure on the German and European export economies, he says. The European Union should conclude trade agreements with countries such as Thailand, Malaysia or the Philippines to help companies in supply-chain diversification and market development, he adds. ([email protected])0704 ET - The dollar trades steady while Treasury yields turn slightly lower ahead of the U.S. nonfarm payrolls report at 1230 GMT. The probability of a U.S. interest-rate rise in September will depend heavily on data along with ongoing developments in the Middle East and price action in the Treasury market, MUFG Bank's Lee Hardman says in a note. "If the long end of the Treasury market becomes unanchored with yields marching higher ahead of the September FOMC meeting it would increase pressure on the Fed to hike rates to reinforce their inflation-fighting credibility," he says. The DXY dollar index trades flat at 99.919. The 10-year Treasury yield falls 0.6 basis points to 4.664%, Tradeweb data show.([email protected])0701 ET - German industry has proved resilient amid high energy prices, and the rebound in business surveys in July suggests the immediate outlook is relatively good, Capital Economics' chief Europe economist Andrew Kenningham says in a note. The 0.2% rise in German industrial production in June was the third consecutive monthly increase, allowing output to rise 0.7% in the second quarter. Production in energy-intensive sectors declined in June but over the second quarter it rose quite sharply, despite rising global energy prices, Kenningham says. Surveys such as the manufacturing output PMI and Ifo index suggest positive momentum in manufacturing may continue, although record-low water levels in the Rhine could dampen output in the coming weeks, he says. ([email protected])0657 ET - German industrial production saw a slight increase in the three months through June, and given full order books, that recovery is likely to continue in the third quarter of the year, Deutsche Bank's Marc Schattenberg says. Production was up 0.7% in the second quarter, with production rising 0.2% on month in June. June's production was helped by a jump in automotive output, though it weakened in manufacture of machinery, the data show. Looking ahead, sentiment indicators, such as Ifo's business-climate index and the PMIs are also sending improving signals, Schattenberg says. However, in the short term, transport problems due to the Rhine River's low water levels could create challenges for industrial firms, he notes. ([email protected])0654 ET - The Polish zloty would probably only temporarily recover if the Middle East conflict de-escalates in coming months and risk appetite improves, Commerzbank's Tatha Ghose says in a note. Some gradual depreciation in the zloty should resume next year as Poland's central bank could switch back to signalling interest-rate cuts quite quickly if the geopolitical impasse ends, he says. Political uncertainty also looks set to return with the 2027 general election and there's a risk the Law and Justice party or broader right-wing bloc wins, he says. Commerzbank expects the euro to fall to 4.25 zloty by December before rising to 4.40 a year later, compared to 4.2967 currently. ([email protected])0622 ET - Fund inflows into global bonds increased to $23 billion this week, supported by strong demand for U.S. high-yield bonds, TD Securities' Alex Loo says in a note. U.S. inflows led the pack with $17.8 billion, up from $7.9 billion last week, he says. Canadian and eurozone government bonds also recorded strong inflows, Loo says. Inflows into global equities cooled, however, to $32.9 billion from $63.7 billion last week, he says. ([email protected])0610 ET - Inflation-linked bonds look favorable as inflation pressures could be more prevalent than markets expect, RBC BlueBay Asset Management's Mark Dowding says in a note. Supply disruptions from the Middle East conflict could keep energy prices elevated and push up inflation, Dowding says. Long-dated bonds look less appealing over the medium term due to inflation concerns, he says. ([email protected])