Treasury Yields Fall as Geopolitical Fears Ease — Market Talk

1551 ET - Treasury yields fall as hopes for a diplomatic solution to reopen the Strait of Hormuz pick up. Oil prices fall 5%, easing inflation fears, amid reports that talks are going on, although Tehran says the U.S. isn't part of them. The news comes ahead of a batch of labor data likely to help markets gauge what the Fed will do next month. Economists surveyed by WSJ expect June job openings to decline in tomorrow's JOLTS report. Private-sector job creation in July is expected to decline Wednesday and nonfarm payrolls are forecast to increase Friday. The 10-year yield sheds 0.059 percentage point to 4.684%. The two-year falls 0.034 p.p. to 4.255%. ([email protected]; @ptrevisani)1433 ET - An exploit in the code of the Coldcard Wallet, a hardware-based wallet for holding bitcoin, led to a large-scale theft of bitcoin that started last week. Hardware wallets are considered by many to be the safest option for holding cryptocurrencies, with the Coldcard Wallet among the leading products. Victims of the hack have taken to social media to share their stories of drained accounts, with some questioning the long-term viability of bitcoin if this and other vulnerabilities in code are found and exploited. Through last Friday, Galaxy Research projects that 1,082.65 BTC were stolen from the Coldcard wallets, worth roughly $70.2 million at that time. Bitcoin has managed to stay positive in today's trading, up 0.7% to $63,878 today. ([email protected])1425 ET - Purchasing managers indexes for Mexico were mixed in July, while showing signs of improvement to kick off the second half of the year. The Mexican Institute of Finance Executives' manufacturing index rose 1.5 points to 49.4, while its services index increased 0.7 to 49.9.The July results show a moderate improvement in economic activity, but not yet enough to confirm the start of a period of sustained expansion, IMEF says. S&P Global's Mexico manufacturing PMI is unchanged from June at 51.3, and the Inegi/Bank of Mexico index slipped 0.1 point to 50.([email protected])1409 ET - The dollar partially reverses its decline against the yen, pushing the WSJ Dollar Index up, as the impact of a joint Washington-Tokyo intervention loses momentum. Authorities have confirmed the action to prop up the Japanese currency, while FX analysts argue that deeper policy changes are needed to support the yen in the long run. Meanwhile, markets contemplate a new attempt to reopen the Strait of Hormuz via diplomacy. Oil falls more than 5%. The WSJ Dollar Index rises 0.1% as the greenback strengthens 0.5% against the pound and the Swiss franc and 0.4% versus the euro. The dollar is down 0.4% versus the yen, off early lows against the Japanese currency. ([email protected]; @ptrevisani)1229 ET - Economists surveyed in July by the Bank of Mexico nudged up their median estimate for economic growth this year to 1.2% from 1.1% in the June survey. Estimates range from 0.5% to 1.5%. The 2027 GDP forecast was unchanged at 1.8%. GDP expanded 1.5% in 2Q from the previous quarter, recovering after a 0.6% decline in 1Q.The year-end inflation estimate fell to 4% from 4.2% in the central bank's June survey. Core CPI is also seen ending the year at 4%, down from the previous estimate of 4.18%. The Bank of Mexico's benchmark interest-rate target is expected to end this year at the current 6.5%, according to the survey. ([email protected])1221 ET - Bitcoin stays rangebound above $60k, trading up 0.4% to $63,697, according to LSEG data. Trading volumes are light, says analysts with Bitfinex in a note, but roughly 50% of BTC holders are back to being profitable. From here, how macroeconomics develop going forward looks to be the main driver for how bitcoin moves, says Bitfinex. "The current environment can help and hurt at the same time," says the firm. Ethereum is down 1.1% to $1,862, XRP is up 0.2% to $1.08, and solana falls 0.2% to $73.53. ([email protected])1113 ET - Bitcoin is trading up 0.4% to $63,712, managing to trade higher despite several sources of pressure. Strategy confirms a new sale of bitcoin, with 1,638 BTC sold at an average price of $63,957, worth roughly $105 million. This leaves Strategy with a stockpile of 842,138 BTC at an average price of $75,419. That's an unrealized loss of $9.9 billion for Strategy's bitcoin treasury. While previous sales of bitcoin announced by Strategy have pushed prices lower, fundamentals have shifted enough for bitcoin to stand firm this time. "Market conditions continue to improve beneath the surface," says Cex.io in a note, citing ETF inflows and lower liquidations. ([email protected])1110 ET - Issuance of new euro covered bonds is expected to remain relatively low in August as some market participants take a summer holiday, ING's Marine Leleux says in a note. Covered bonds are debt securities supplied by financial institutions and they are secured by high-quality assets such as mortgages or public loans. Gross covered-bond issuance in August could rise from July's level of 1 billion euro's ($1.15 billion) but this could be outpaced by covered-bond redemptions of 8.5 billion euros, Leleux says. ([email protected])1046 ET - The U.K. Debt Management Office's planned gilt syndication of the January 2056 gilt could have a transaction size of between 4.5 billion pounds ($6 billion) and 5 billion pounds, RBC Capital Markets strategists say in a note. The DMO said that it is expected that the syndication "will be a modestly-sized transaction, subject to market feedback closer to the time". RBC strategists say that the syndication's implied transaction size is 5 billion pounds nominal, given the DMO's target to raise 15 billion pounds through three long conventional gilt syndications in the current fiscal year. ([email protected])1019 ET - The impact of last week's joint U.S.-Japan intervention to strengthen the yen could prove limited, ING's Chris Turner says in a note. The intervention doesn't change the fact that the Federal Reserve is close to raising interest rates and Japan is running a loose set of monetary and fiscal policies which are weighing on the yen, he says. "We struggle to see this bilateral action driving dollar-yen sustainably below 155." Nevertheless, it could prevent investors from pushing the dollar above 160 yen while buying time for Japan to introduce more yen-positive policies such as incentives to invest in domestic assets, he says. The dollar falls 0.6% to 156.69 yen after reaching a three-month low of 155.21 overnight, according to LSEG. ([email protected])1005 ET - The Hungarian forint stands to benefit the most among its central European peers from hopes for Middle East diplomacy due to its sensitivity to global risk sentiment, ING's Frantisek Taborsky says in a note. "The lack of further escalation points to a more constructive mood in the days ahead, while new highs in euro-dollar should support some gains in Central and Eastern European currencies." The euro falls 0.2% to 363.75 forints. It reached a one-week high of 364.94 on Friday, LSEG data show. The forint's decline Friday was driven by risk aversion and Hungary's temporary closure of a nuclear power plant which could affect both industrial production and energy imports, Taborsky says. ([email protected])1003 ET - The housing market is settling into its expected summer slowdown, with sellers increasingly adjusting prices while buyer demand continues to hold up, Realtor.com says. The national median list price was $428,950 in July, essentially unchanged from June but down 2.4% from a year ago. The share of listings with a price reduction rose to 20%. Pending sales increased 1.3% year-over- year, though momentum has slowed from 4.1% in May and 3.7% in June. The median home spent 57 days on the market in July, four days longer than in June. Price cuts remain least common in the Northeast, at 13.7% of listings, and the Midwest, at 18.7%. Price-cut shares remain below last year's levels in the South, at 21.3%, and West, at 21.9%. ([email protected])