Flow, Oil Are Key Drivers for Eurozone Bond Yields Before Friday's PMI Data — Market Talk

0728 GMT - Eurozone government bond yields are likely to react most to flow, oil and bond supply than they are to European Central Bank rate pricing until Friday's release of flash purchasing managers indices, Mizuho says in a note. The PMI data will provide "the next proper macro check," it says. Pricing at the shorter end of the yield curve should stay relatively stable, but the longer end still looks vulnerable if global yield curves keep steepening, Mizuho says. ([email protected])0722 GMT - Thailand is likely to remain a regional underperformer over the coming year, Capital Economics' senior Asia economist Gareth Leather says in a note. Second-quarter GDP growth weakened to 1.9% on year from the 2.8% expansion seen in 1Q. Growth was weighed down by the consumer sector, with household spending slowing during the quarter. The sector has been badly hit by the Middle East crisis, which has lifted energy prices and led to a sharp rise in inflation. "However, with energy prices falling back and inflation having probably peaked, household spending may recover somewhat from here," Leather says. CE expects Thailand's economy to expand around 2.0% in 2026, slower than the 2.4% growth seen in 2025.([email protected])0717 GMT - Yields on U.K. government bonds, or gilts, are little changed ahead of key economic data releases this week. These include U.K. labor market figures Tuesday and inflation data set to be released on Wednesday. The data will be watched for clues on the prospects of the Bank of England raising interest rates in 2026. Markets currently fully price in one quarter-point BOE rate rise in December, LSEG data show. Ten-year gilt yields are steady at 5.018%, Tradeweb data show. ([email protected])0715 GMT - Bitcoin rises as a paring of U.S. interest-rate rise expectations supports risky assets. However, bitcoin's gains are limited amid ongoing uncertainty over the U.S.-Iran conflict, with a deadline to reach a peace deal having passed without any plans announced. Uncertainty over crypto regulation also remains an "important restraint," Zaye Capital Markets analyst Naeem Aslam says in a note, referring to digital assets bill Clarity Act having stalled in the U.S. Senate. Bitcoin's outlook depends on whether improving liquidity and institutional access can overcome regulatory delays and short-term exchange traded fund outflows, he says. Bitcoin rises 0.9% to $63,605, LSEG data show.([email protected])0713 GMT - The Australian dollar got everything it needed last week to sustain its low-key uptrend into a seventh week, says Richard Franulovich, head of FX strategy at Westpac. The rally above 71 US cents is being sustained by hawkish guidance from the Reserve Bank of Australia, softer U.S. July inflation data damping Fed hike expectations, and swirling questions about whether long-term U.S. Treasurys are still a solid investment, he says. The Australian dollar has begun the week solidly and the price action carries a more spirited feel, Franulovich adds. ([email protected]; X @JamesGlynnWSJ)0706 GMT - Eurozone government bond yields trade stable even as U.S. Treasury yields fall, as high energy prices remain a key factor in Europe with no progress in the Middle East. "Hopes of a deal between U.S. and Iran are fading as U.S. is set to announce measures for Iran's economic isolation this week," Jefferies' Mohit Kumar says in a note. There is no input from the economic data side, nor from any supply. The 10-year Bund yield is stable at 3.20%, according to LSEG data. ([email protected])0659 GMT - The dollar falls to a 10-day low against a basket of currencies as expectations for the Federal Reserve to raise interest rates this year dim. Recent weak jobs data and subdued inflation data prompted markets to trim rate rise bets. Investors are now looking ahead to the Fed's latest meeting minutes on Wednesday for any policy clues. "Given Fed Chair Kevin Warsh has stepped back from offering policy guidance, the minutes may shed extra light on how the Fed is weighing inflation risks as well as their urgency to act should those risks remain elevated," Deutsche Bank analysts say in a note. The DXY dollar index falls to as low as 99.452.([email protected])0643 GMT - Thailand's growth outlook remains challenging, ANZ Research analysts say in a note. GDP growth slowed in 2Q to 1.9% on year, from 1Q's 2.8%. During the quarter, import volumes were driven by higher demand for electrical and electronic products amid rising AI-related investment. However, growth has been weighed by a sharp deterioration in net exports. Rising inflationary pressures also likely weighed on Thailand's real consumption spending. "Looking ahead, higher public and private investment need to translate into meaningful productivity gains for the Thai economy," ANZ says. ([email protected])0612 GMT - Australia's property market remains depressed thanks in part to higher interest rates and changes to tax arrangements for property investors, but there are some signs of life returning. The preliminary combined capitals auction clearance rate nudged up a little last week to 56.5%, its highest early success rate in 12 weeks, says property research group Cotality. This came despite falls in the two largest markets, where Sydney eased 1.4 percentage points and Melbourne 3.4 percentage points, it adds. The gains were concentrated in smaller markets, such as Adelaide, Brisbane and Canberra, Cotality says. ([email protected]; X @JamesGlynnWSJ)0605 GMT - The Australian dollar is trading above 71.00 U.S. cents for the first time since June, supported by the Reserve Bank of Australia's "hawkish hold" of official interest rates last week, says Tony Sycamore, market strategist at IG Markets. Cooler-than-expected U.S. economic data are also weighing on the U.S. dollar, he adds. During the press conference that followed the RBA's decision last week, Governor Michele Bullock kept the door open to further tightening if inflation risks materialize. That hawkish bias has provided a solid undercurrent of support for the Aussie dollar, Sycamore adds. ([email protected]; X @JamesGlynnWSJ)0601 GMT - The Japanese government is unlikely to declare an end to deflation this fiscal year ending in March 2027, given Monday's release of sluggish growth data, says Daiwa Securities economist Kento Minami. The Takaichi administration has said that it is closely examining whether the economy is strong enough to avoid returning to deflation before declaring an official end to it. The timing of the announcement is closely watched as it could affect the government's stance toward the Bank of Japan's monetary tightening. Strengthening economic fundamentals and key indicators--including inflation, the output gap, and unit labor costs--suggest that there is a low risk of Japan lapsing back into persistent deflation, Minami says.([email protected])0550 GMT - As the holiday season in the eurozone is nearing its end, the government bond syndication season after the summer holidays may already get under way, Commerzbank's Erik Liem says in a note. Finland is usually the first country after the summer to carry out a syndicated transaction and Commerzbank expects this pattern to be repeated this year. "A new five-year RFGB [Finnish government bond] may already be launched this week," the rates strategist says. Meanwhile, a syndicated tap of Germany's 30-year Bund could follow next week, Liem says. ([email protected])