Gilt Yields Fall as U.S.-Iran Negotiations Could Be Progressing — Market Talk

1051 ET - Yields on U.K. 10-year government bonds, or gilts, fall to their lowest in three weeks as oil prices drop on optimism about prospects of a resolution to the U.S.-Iran conflict. U.S. Treasury Secretary Scott Bessent said an agreement with Iran could be reached by Wednesday, while a Qatari official talked about the possibility of a U.S.-Iran deal soon. Ten-year gilt yields drop around four basis points to a low of 4.910%, Tradeweb data show. ([email protected])1034 ET - An improved Japanese economic growth outlook is likely needed to trigger a durable yen rally as opposed to further currency interventions, Societe Generale's Kit Juckes says in a note. "More, or faster Bank of Japan rate hikes won't solve the problem either, unless the Japanese growth outlook makes them appear realistic." Japan's growth gap with the eurozone is expected to widen next year given Japan's higher debt to gross domestic product burden and narrower yield differentials. If Japan's growth remains weak, higher Japanese government bond yields will increasingly weigh on the yen, he says. The dollar rises 0.2% to 157.48 yen. It reached a three-month low of 155.21 Monday, according to LSEG, after the U.S. and Japan confirmed joint intervention. ([email protected])1012 ET - Investors are gradually returning to trading cryptocurrencies, after a big wind-down seen in June. It appears to be a sign of investor appetite for cryptocurrencies slowly returning, says Colin Basco of Coinbase Institutional in a note. "Positioning looks rebuilt rather than flushed, with open interest expanding even as turnover contracted," says Basco. CoinGlass data shows that bitcoin is exhibiting higher levels of liquidation of short positions over the past 24 hours, with $164 million in shorts liquidated in that time. Major cryptocurrencies are mixed in morning trade, with bitcoin up 0.1%, ethereum flat, XRP down 0.8% to $1.07, and solana down 0.1% to $73.73. ([email protected])0918 ET - The Bank of England quantitative tightening program--or the process of unwinding the BOE's gilt holdings by selling gilts--could be leading to tighter monetary conditions, Bank of America strategists say in a note. At the policy meeting in July, the BOE estimated that the QT process has increased 10-year gilt yields by 20 to 30 basis points since the start of the program in 2022. "Overall, the Bank estimates that quantitative tightening is responsible for between a tenth and a sixth of the total rise in term premium in 10-year gilt yields." Ten-year gilt yields are last down 1.7 basis points at 4.935%, Tradeweb data show. ([email protected])0915 ET - The dollar should continue to find support from relatively good U.S economic data in the near term, Rabobank's Jane Foley says in a note. Monday's stronger-than-expected ISM manufacturing report bodes well for the key nonfarm payrolls report on Friday, she says.At the same time, markets remain reluctant to bet on a stronger euro due to uncertainty over the impact of higher energy prices on eurozone economic growth and inflation, she says. "For now we maintain the view that choppy ranges mostly within the euro-dollar $1.14-$1.15 level are likely to persist in the coming months." However, the Federal Reserve's credibility and U.S. fiscal position remain potential risk factors for the dollar, she says. The euro rises 0.1% to $1.1518. ([email protected])0913 ET - The dollar reclaims some ground against the yen after the joint Washington-Tokyo intervention to prop up the Japanese currency. Treasury Secretary Bessent says on CNBC that the U.S. stands to support its Asian ally. "So, given the trade flows, given the size of the economy, given their contribution to the global savings market, it's very important to have a stable yen." Bessent adds that policy needs to follow for sustainable results. "[W]e can give market signals, but at the end of the day, it's going to be policy and fundamentals," he says, adding that "we are very optimistic on their policy path." The USDJPY rises 0.2%. ([email protected]; @ptrevisani)0907 ET - Bitcoin's downtrend from last year's high remains firmly intact, ING technical analyst Roelof-Jan van den Akker says in a note. Prices have recovered from recent lows but gains have been modest, he says. Bitcoin is unlikely to rise sustainably above key resistance between $65,670 and $69,900, he says. "We would not be surprised to see prices break and close below the major long-term horizontal support level around $54,450 in the coming months, which would trigger another long-term sell signal and reinforce the prevailing bearish trend." Bitcoin rises 0.1% to $63,823, according to LSEG. It reached a 21-month low of $57,775 on July 1 and an all-time high of $126,223 in October 2025. ([email protected])0851 ET - Treasury yields decline ahead of U.S. labor data and as Treasury Secretary Bessent indicates in a CNBC interview that a deal with Iran to reopen the Strait of Hormuz could come "today or tomorrow." Oil prices extend their decline, with WTI at $78 a barrel. The June trade deficit of $73.3 billion is wider than expected in a WSJ consensus. The JOLTS report at 10 a.m. ET is expected to show job openings slipping to 7.4 million in June from May's 7.6 million. The WSJ Dollar Index is steady, as the dollar strengthens 0.2% against the yen following the recent pro-yen intervention. The 10-year yield is at 4.665%, down from 4.684% yesterday. The two-year slips to 4.219% from 4.255%. ([email protected]; @ptrevisani)0838 ET - Record-low water levels along Germany's Rhine river could shave 0.3 percentage points off the country's economic growth this year, Carsten Brzeski at ING says in a note. Water levels along the Rhine--which carries around 80% of Germany's inland waterway freight--have fallen to a record low. This threatens supply chains and industrial production, as ships are operating with sharply reduced loads, he says. Research from the Kiel Institute found that the 2018 drought cut inland shipping by about 25%, reduced industrial output by roughly 1%, and shaved around 0.3 percentage points off German GDP growth. "The risk is high that this time around, the economic impact will be larger," although the country should avoid recession, Brzeski says. ([email protected])0732 ET - Sterling could fall slightly over the remainder of the year if the Bank of England refrains from raising interest rates and the U.K. economy weakens, Metzler analyst Leon Ferdinand Bost says in a note. "This is even more true against the euro if the European Central Bank raises interest rates again in September and the eurozone economy continues to perform solidly, as we expect." However, fiscal concerns shouldn't prove a structural burden for the cu8rrency, he says. Prime Minister Andy Burnham probably won't overstep the fiscal rules, instead delivering a gradual reduction in the budget deficit, he says. Metzler expects the euro to rise to 0.88 pounds by year-end from 0.8464 currently. ([email protected])0708 ET - Yields on U.K. government bonds rise as oil prices rise. Reports that a vessel was struck in the Strait of Hormuz contribute to higher oil prices. Iran also on Monday said there were no planned talks with the U.S., after President Trump's announcement that the U.S. and Iran were due to hold negotiations. Uncertainty is high surrounding the direction of the Middle East conflict and the full impact of the war. Ten-year gilt yields rise 2 basis points to last trade at 4.972%, Tradeweb data show. ([email protected])0648 ET - Companies will need earnings growth which outpaces the current rise in bond yields in order for their stocks to perform well, BlackRock Investment Institute says in a note. With government-bond yields rising, higher borrowing costs "raise the bar for equities," it says. This could mean investors will need to be more selective when deciding which stocks to buy. "We expect greater dispersion across companies, strengthening the case for active investing," it says. ([email protected])