U.S. Treasury Yields Fall as Mideast Diplomacy Back on the Table — Market Talk

0520 GMT - U.S. Treasury yields fall while oil prices slide in Asian trade, as President Trump has put off a major escalation of his military campaign against Iran amid efforts to revive diplomacy to open the Strait of Hormuz. Treasury yields fall across maturities, reflecting lower oil prices, while investors also await the Federal Reserve's interest-rate decision on Wednesday. Brent oil falls 4.8% to $92.14 a barrel. The two-year yield declines 3.7 basis points to 4.292%, the 10-year yield is down 4.9 basis points at 4.629% and the 30-year yield declines 4.4 basis points to 5.117%, according to Tradeweb. ([email protected])0516 GMT - The Monetary Authority of Singapore could steepen the slope of its policy band "very slightly" in its October statement, say BofA Securities strategists in a note.The central bank surprised by steepening the slope "very slightly" in July, with the choice of words seeming unprecedented to the strategists. The latest move--estimated to be a 25bp change rather than the conventional 50bp adjustment--suggests a policy preference towards greater flexibility amid an uncertain external backdrop, they say. The MAS likely views the current policy stance as moderately tight, as the move raises the degree of policy restrictiveness by a small margin, the strategists say. The central bank uses the exchange rate as a policy tool for maintaining price stability, given the city-state's small and open economy.([email protected])0326 GMT - Bitcoin rises in Asian trading as market sentiment improves ahead of the potential passage of the U.S. Clarity Act. A strong lobbying push by pro-crypto lawmakers and Wall Street has accelerated the bill's progress toward a Senate floor vote, generating positive headlines that have supported bitcoin, CoinMarketCap analyst Ray Salmond says. Meanwhile, aggregate trading volume has topped $1.9 billion, while spot bitcoin ETFs have recorded seven straight days of net inflows totaling $981 million, signaling market structure support, he adds. Bitcoin is up 1.0% at $65,234.01.([email protected])0239 GMT - The Singapore dollar edges higher against its U.S. counterpart in the Asian session, buoyed by the Monetary Authority of Singapore's unexpected monetary-policy tightening earlier. The MAS' move was expected by just one of the 10 analysts polled by the WSJ. The other nine had anticipated that the central bank would stand pat. The MAS' decision saw "a slight steepening in the policy band slope," analysts at CIMB's Treasury and Markets Research say in a research report. The MAS' monetary policy centers on the exchange rate, which is perceived as a more effective tool for maintaining price stability given Singapore's small and open economy. The U.S. dollar is 0.1% lower at 1.2891 Singapore dollars. ([email protected])0239 GMT - The Monetary Authority of Singapore's policy tightening underscores that inflation is still the dominant policy concern, S&P Global Market Intelligence's Ahmad Mobeen says in a note. Recent economic developments, including Singapore's stronger-than-expected 1H growth and imported energy cost pressures, point to firmer price dynamics, the principal economist says. The smaller adjustment of policy than in April likely reflects a "balancing act by MAS due to heightened uncertainty and lingering downside risks to economic growth," the economist adds. Earlier Monday, the central bank said it will "increase the rate of appreciation of the policy band very slightly," compared with "slightly" in April. ([email protected])0228 GMT - Singapore's smaller-than-usual tightening suggests the Monetary Authority of Singapore is giving itself more room to move early and incrementally, Societe Generale says. The "very slight" increase in the S$NEER slope may amount to 0.25 percentage point, below the conventional 0.5-point adjustment, economist Galvin Chia says. That points to insurance tightening against external price shocks rather than the start of a broader cycle, particularly with the core-inflation forecast unchanged. Still, the decision leaves policy risks tilted hawkish and could provide a modest tailwind to the Singapore dollar, SocGen says. ([email protected])0210 GMT - The appointment of Senior Deputy Gov. Destry Damayanti as the new Bank Indonesia governor signals near-term policy continuity, with BI remaining focused on rupiah stability, two economists at OCBC Group Research say in a report. "Her recent statements to various media outlets confirm that her views are broadly consistent with those previously communicated to market participants," the economists note. However, "there is limited clarity at this juncture on whether this appointment is temporary or permanent," they say. "Should this appointment prove temporary, there is a risk of a continued perception overhang, and the burden of maintaining stability will fall on the eventual replacement appointee," the economists add. The dollar is 0.1% higher at 17,950 rupiah, LSEG data show. ([email protected])0032 GMT - Asian currencies are mixed against the dollar in early trade, but may strengthen amid signs of a pause in the U.S.-Iran conflict that could underpin appetite for risky assets. The "key development over the weekend was a pause in [U.S.] strikes against Iran since late Friday," MUFG Bank's Michael Wan says in a research report. "While it is difficult to know for sure how things will pan out, our base case remains for de-escalation over time," the senior currency analyst says. The U.S. dollar declines 0.2% to 163.53 yen, but is 0.1% higher at 1,460.30 won, LSEG data show. ([email protected])0015 GMT - Japanese stocks are higher as fears about a further escalation of the Iran conflict ease for now. Airline and auto stocks are leading gains. Japan Airlines is up 4.2% and carmaker Subaru Corp. is 2.8% higher. The dollar is at 163.56 yen, down from Y163.78 as of Friday's Tokyo stock market close. Investors are closely watching crude oil prices after President Trump has put off a major escalation of his military campaign against Iran. The Nikkei Stock Average is up 0.4% at 64859.12. ([email protected]; @kosakunarioka)0015 GMT - JGB futures rise in early Tokyo trade amid falling crude oil prices that typically lead to lower inflation in Japan. Investors will closely monitor the BOJ's two-day meeting starting Thursday, where the central bank is widely expected to leave rates unchanged. "The focus will be on the economic outlook in its quarterly Outlook Report as well as voting behavior," Citi Research's Tomohisa Fujiki says in a research report. Even if a more hawkish stance is confirmed, market reaction will probably be limited, the rates strategist says, noting probability of a rate hike in October increased to above 80% on July 22. "A further rise seems a way off," Fujiki adds. Benchmark 10-year JGB futures are 0.44 yen higher at Y127.23. ([email protected])2341 GMT - Japanese stocks may rise as fears about an escalation in the Iran conflict ease for now. Nikkei futures are up 1.2% at 65460 on the SGX. The dollar is at 163.68 yen, compared with Y163.78 as of Friday's Tokyo stock market close. Investors are focusing on developments in the Middle East and crude oil prices after President Trump pauses a major escalation of his military campaign against Iran. The Nikkei Stock Average fell 2.7% to 64611.15 on Friday. ([email protected])