Bitcoin Lifted by Reduced U.S. Rate-Rise Bets — Market Talk
0711 GMT - Bitcoin stays elevated after reaching a one-week high earlier as U.S. interest-rate rise expectations ease, boosting risky assets. Federal Reserve governor Philip Jefferson said the Fed might need more time to assess the direction of the economy before making any additional policy adjustments. The U.S. nonfarm payrolls report at 1230 GMT will be closely monitored for clues on future policy. Stronger-than-expected jobs data could push Treasury yields and the dollar higher, potentially weakening bitcoin, Zaye Capital Markets analyst Naeem Aslam says in a note. "Softer labor data could reduce expectations for further tightening, weaken yields and improve the environment for renewed [bitcoin] exchange traded fund inflows." Bitcoin rises 1.6% after reaching as high as $86,807 earlier, according to LSEG. ([email protected])0709 GMT - The Swiss franc rises to a two-month high against the euro and a one-week high versus the dollar. The franc is supported by markets scaling back U.S. interest-rate rise expectations and safe-haven flows as the gap between French-German government bond yields widen to a 14-year high on French fiscal concerns. Federal Reserve governor Philip Jefferson said the central bank might need more time to assess the direction of the economy before making any additional policy adjustments, dampening rate-rise bets. Markets are now looking ahead to the U.S. nonfarm payrolls report at 1230 GMT for hints on future policy decisions. The euro falls to as low as 0.9303 francs and the dollar falls to as low as 0.8265 francs.([email protected])0654 GMT - The spread between French and German 10-year government bond yields hit its highest since 2012, extending Thursday's jump after the French government proposed a 2027 budget containing 43 billion euros in cuts and cost savings. "Bond market developments are concerning," Commerzbank strategists say in a note. Importantly, the widening is no longer concentrated on France, with notable spillovers into other high-debt countries including Italy, Belgium and Greece, they say. The spread between 10-year French OATs and German Bunds hit a high of 149.17 basis points, LSEG data show. ([email protected])0652 GMT - The spread between French and German 10-year government bond yields hits its highest since 2012, extending Thursday's jump after the French government proposed a 2027 budget containing 43 billion euros in cuts and cost savings. "Bond market developments are concerning," Commerzbank strategists say in a note. Importantly, the widening is no longer concentrated on France, with notable spillovers into the other high-debt countries including Italy, Belgium and Greece, they say. The spread between 10-year French OATs and German Bunds hits a high of 149.17 bps, LSEG data show. ([email protected])0644 GMT - China's policy stimulus package is still a positive step despite its limited scale, according to BofA Securities in a research note. The package offers "targeted support to boost investment and stabilize the property market, while falling short of sending a strong easing signal on meaningful policy pivot to lift public expectation," the bank says. It thinks the move implies that policymakers are taking the first steps to stabilize growth, while still remaining "relatively comfortable" with aggregate demand given strong exports, they say. "Unless we see meaningful correction in export growth and/or fiscal deterioration, the probability of launching a more aggressive policy stimulus package will remain low," the bank says. ([email protected])0644 GMT - Treasury yields are steady, staying below Thursday's multiyear highs ahead of key U.S. jobs data due at 1230 GMT. Treasurys are helped by easing expectations for an interest-rate hike by the Federal Reserve this month and by safe-haven flows as French-German government-bond yield spreads surge on French fiscal worries. Fed governor Philip Jefferson said at an event that the Fed may need more time to assess the economy before making additional policy adjustments. U.S. money markets price a probability of just 26% that the Fed will raise rates this month, down from around 70% early this week, LSEG data show. The 10-year Treasury yield is steady at 5.235%, pulling back from Thursday's 24-year high of 5.344%, Tradeweb data show. ([email protected])0642 GMT - The dollar eases after reaching a near 18-month high Thursday as markets trim lofty expectations for U.S. interest-rate rises and await the key U.S. nonfarm payrolls report at 1230 GMT. Federal Reserve governor Philip Jefferson said the central bank might need more time to assess the direction of the economy before making any additional policy adjustments. It follows similar remarks from New York Fed President John Williams earlier this week. Markets now price just a 26% chance of a rate increase in October, according to LSEG. Attention now turns to the payrolls data for further clues on future rate decisions. The DXY dollar index falls 0.2% to 101.873 after reaching as high as 102.207 Thursday. ([email protected])0514 GMT - South Korea's strong chip-led exports are yet to spill over into wages, consumption and services inflation, Nomura's Jeong Woo Park says. The country's export strength increases upside risks to economic growth and bolsters a hawkish policy bias at the Bank of Korea. However, a weaker labor market, falling real wages and softer consumption do not support the view that chip exports are spilling over into the broader economy, the economist says in a note. Park maintains his forecast that the BOK will deliver two more quarter-percentage-point rate increases--possibly in November 2026 and February 2027--for a terminal rate of 3.50% in the current hiking cycle. A higher terminal rate would require evidence of chip spillover effects and persistent domestic inflation pressures, he adds. ([email protected])0513 GMT - Investors may shift their focus to the EU-China trade outlook in the near term as U.S.-China trade appears relatively stable following the Trump-Xi meetings, according to BofA Securities in a research note. Looking ahead, the European Council Summit on mid-October could provide a platform for member states to assess policy options toward China, the bank says. "In our view, the tone of policy discussions around Chinese EVs has become notably less confrontational than it was a year ago, reducing the likelihood of further near-term escalation," the bank says. Investors will watch closely for any developments related to rare earths and export controls, BofA says. ([email protected])0508 GMT - Japanese stocks look attractive, especially when the dollar is trading above 152 yen, T. Rowe Price's David Clewell says in a note. The 152 yen level is significant because it is broadly in line with the foreign-exchange assumption found in the Bank of Japan's tankan quarterly survey for Japanese companies, says Clewell, a portfolio manager. He says when the yen is weaker than that level, that can support upward earnings revisions for Japanese exporters. The Nikkei Stock Average is 1.0% lower at 68263.54. The dollar is at Y157.82. ([email protected]; @kosakunarioka)0341 GMT - The dollar will likely trade between 4.07 ringgit and 4.09 ringgit next week, with selective ringgit buying expected if the dollar rises toward 4.09, Kenanga economists say in a note. Malaysia's current-account surplus, steady bond inflows and expectations for a potential Bank Negara Malaysia rate increase in 1Q 2027 could support the ringgit, they say. U.S. payrolls and inflation data will be key near-term drivers, with a weaker-than-expected jobs report likely to pressure U.S. yields and support the ringgit, while a stronger reading could revive expectations for a Fed rate hike in October and extend the dollar's rally, they add. Kenanga expects the dollar to face resistance at 4.090 ringgit, with support at 4.083 ringgit. The dollar is flat at 4.0861 ringgit. ([email protected])0331 GMT - South Korea's September inflation data could be seen as a sign that the Bank of Korea's recently tight monetary policy is beginning to ease underlying price pressures, says John Bromhead at Moody's Analytics. With core inflation slowing to 2.8% from 3.4% the previous month, the economist notes that agricultural prices eased as supply improved around the Chuseok holiday season, while services inflation also lost some momentum. "Overall, inflation appears to be becoming less broad-based, although elevated energy costs remain a persistent source of pressure for households and businesses," he says. Though further rate increases by the BOK are unlikely to ease inflation driven by energy and transport prices, strong September trade data could give the central bank enough room to consider another hike in November, he adds. ([email protected])