Swiss Franc's Falls Versus Euro Could Be Contained By Strong Swiss Growth — Market Talk

0838 ET - The Swiss franc falls to a one-year low against the euro, extending a string of losses over recent days, pressured as high oil prices increase the likelihood of interest-rate rises from other central banks. The prospect of the Swiss National Bank leaving rates at zero and threats of currency interventions have diluted the franc's safe-haven appeal amid the Iran war, Rabobank's Jane Foley says in a note. However, the franc's falls could be limited by Switzerland's strong economic growth, she says. Data Friday showed Switzerland grew 1.5% quarter-on-quarter in the second quarter, outpacing U.K. and eurozone growth. The euro earlier hit a high of 0.9405. Rabobank expects it to reach 0.95 francs in 12 months. ([email protected])0823 ET - High German government bond yields are driving up yields on euro-denominated investment-grade bonds, LBBW's Michael Kohler and Benedikt Horwedel say in a note. Rising public spending has caused Bund yields to rise, in turn pushing up euro IG corporate-bond yields, the analysts says. Ten-year Bund-yields climb 2.8 basis points to last trade at 3.162%. ([email protected])0730 ET - Bitcoin remains under pressure as persistent geopolitical tensions dampen risk sentiment. Defense Secretary Pete Hegseth said the U.S. could maintain its blockade of Iranian ports indefinitely while Treasury Secretary Scott Bessent said the U.S. will soon announce unprecedented economic measures against Iran. "The war against Iran is not going well for the U.S. and the world at large," Berenberg economists say in a note. Energy prices have surged, vital supply lines have been severed and elevated uncertainty is weighing on business decisions, they say. Bitcoin falls 0.8% to $62,850 after earlier reaching an 11-day low of $62,569, according to LSEG. ([email protected])0729 ET - Markets await remarks by U.S. Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium which will take place from August 27 to 29, LBBW's Elmar Volker says in a note. Investors will seek to know how the Fed plans to restore price stability, Volker says. If Warsh fails to provide answers, investors could demand a higher risk premium on long-dated U.S. Treasurys, he says. U.S. 30-year Treasury yields rise 2.3 basis points to 5.234%, Tradeweb data show. ([email protected])0727 ET - The trimming of U.S. interest-rate rise expectations has failed to trigger another significant leg lower for the dollar after its recent selloff, MUFG Bank's Lee Hardman says in a note. "The price action suggests that the dollar could be deriving support from inflows into the U.S. equity market, in particular AI-related stocks." The DXY dollar index falls 0.2% to 99.729 but remains above the 200-day moving average of 99.200. The index reached a seven-week low of 99.418 on August 3 when the U.S. and Japan confirmed a joint intervention to strengthen the yen. ([email protected])0715 ET - The dollar stays lower following a paring of Federal Reserve interest-rate rise expectations while Treasury yields remain higher as oil prices rise on ongoing U.S.-Iran tensions. The market is no longer fully pricing in an Fed rate rise this year, with 22 basis points priced in by December after recent weak labor market data and soft inflation prints, LSEG data show. Along with higher oil prices, longer-dated Treasury yields remain elevated amid concerns about fiscal borrowing and structurally higher demand for capital, Capital.com's Daniela Hathorn says in a note. The DXY dollar index falls 0.3% to 99.700. The 10-year Treasury yield rises 1.6 basis points to 4.657%, according to Tradeweb.([email protected])0655 ET - The cost of default protection for euro high-yield credit falls as sentiment improves due to lower expectations of the U.S. Federal Reserve raising rates in the coming months. Investors have cut back Fed rate-rise expectations after recently released U.S. inflation and jobs data came in weaker than expected. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 1 basis point to 247bps, S&P Global Market Intelligence data show. ([email protected])0621 ET - Concerns about the state of U.K. public finances remain a worry for U.K. investors ahead of the budget statement in October, analysts at Monex say in a note. Focus is on how the government will meet its spending ambitions given elevated gilt yields, the analysts say. Ten-year gilt yields rise 2.2 basis points to last trade at 4.974%, Tradeweb data show. ([email protected])0611 ET - Sterling is the best-performing major currency so far in August, supported by evidence the U.K. economy is more resilient than expected to the energy-price shock triggered by the Iran war, MUFG Bank's Lee Hardman says in a note. Data Thursday showed the economy expanded 0.4% in the second quarter following 0.6% growth in the first quarter. While a soft labor market and recent lower-than-expected inflation have eased pressure on the Bank of England to raise interest rates, this has failed to weaken sterling. This suggests sterling is being lifted by stronger growth and still attractive yields, he says. Sterling rises 0.3% to $1.3525. The euro falls 0.1% to 0.8540 pounds. ([email protected])0602 ET - Demand for corporate debt has been strong, but as debt supply continues to rise there are concerns about how sustainable demand for the assets is, RBC BlueBay's Mark Dowding says in a note. "One possible concern is whether demand will dry up, as and when policy is tightened and liquidity drains from the system," he says. ([email protected])0524 ET - The dollar's current losses should remain contained in the near term even as recent data suggest sluggish momentum in the U.S. labor market, Commerzbank's Volkmar Baur says in a note. The data show a lack of dynamism in the jobs market with unemployment low but little appetite for hiring, he says. One would think this would be reflected in lower wage growth but this isn't the case yet, he says. "Lower wages would certainly also have an impact on inflation and ease pressure on the Federal Reserve to raise interest rates." This will likely take time to materialize, he says. The DXY dollar index falls 0.2% to 99.732. ([email protected])0439 ET - Markets increase their expectations of the Bank of England raising interest rates in 2026 due to inflation concerns as oil prices advance. The price of Brent crude rises 1.7% to $88.5 a barrel after the U.S. on Thursday threatened that it could maintain its blockade of Iranian ports indefinitely. As the U.K. is a net importer of oil its economy is sensitive to oil-price movements. Investors currently price in a total of 27 basis points of BOE rate hikes by year end, up 2 basis points from Thurday's pricing, LSEG data show. ([email protected])