Bitcoin Rises on Improving Risk Appetite — Market Talk
2146 ET - Bitcoin rises in early Asian trading hours, as risk appetite is improving after President Trump promised not to attack Iran before the midterm elections and unveiled a deal with Russia to secure more diesel. However, expectations for the Fed's policy path remains a key driver of cryptocurrencies' performance, says Antonio Di Giacomo at XS.com in a note. A potential pause in interest-rate increases could offer support, he adds. Higher borrowing rates tend to weigh on risk appetite, hurting cryptocurrencies. Bitcoin is 0.2% higher at $83,785.65. ([email protected])2115 ET - While the Reserve Bank of Australia has kept the door open to further tightening, interest rates are now at or close to their peak, says Harry Jones, Portfolio Manager, Global Rates at Insight Investment. Financial conditions are already restrictive, growth is softening and much of the impact from this year's hikes has yet to fully feed through to the economy, he adds. Against that backdrop, value in Australian duration at current yield levels will remain, particularly as moderating inflation and slower domestic demand should create scope for policy rates to move lower next year, Jones adds. ([email protected]; @JamesGlynnWSJ)2011 ET - Asian currencies consolidate against the dollar, but may be weighed down by rising Middle East tensions that could support safe-haven demand for the greenback. Yemen's Iran-backed Houthi militants conducted a missile attack on Saudi Arabia's international airport that killed at least 12 people and injured hundreds more on Saturday. "We expect the Houthis to continue their attacks on Saudi Arabian energy assets," CBA's Global Economic & Markets Research team says in a research report. This should support gains in the dollar, the team adds. The U.S. dollar is down 0.1% at 1,339.10 won, but is little changed at 1.2802 Singapore dollars, while the Australian dollar is flat at US$0.6983, LSEG data show. ([email protected])1908 ET - The sharp move higher in French bond yields over recent months has generated discussion in markets on whether the European Central Bank could step in at some point to contain the sell-off. But given past experience, current bond spreads aren't close to a level where the ECB will intervene, says Macquarie in a note to clients. The ECB didn't adopt the policy when some economies' bond spreads were much higher in 2022, it says. So far, there is little sign of contagion and the ECB may want to see fiscal consolidation in France first before stepping in, Macquarie adds. ([email protected]; @JamesGlynnWSJ)1820 ET - National Australia Bank's business survey is due out on Tuesday. The survey's condition index, which empirically has the most reliable correlation with real growth in gross national expenditure, has fallen sharply this year and. Outside of the pandemic, the index is running at its weakest level since 2013, says Ben Jarman, chief economist at J.P.Morgan. The survey's pricing metrics will also be important to watch, particularly the final price index, which holds the closest correlation with headline consumer inflation, he adds. ([email protected]; @JamesGlynnWSJ)1754 ET - The minutes from the RBA's September policy meeting on Tuesday are expected to confirm the decision to tighten policy last month was largely pre-emptive and a function of concerns around the inflation outlook, says Ben Jarman, chief economist at JP Morgan. Minutes from the prior meeting suggest inflation concerns remain multi-faceted. They include the Middle East conflict driving oil reserves lower and prices higher, a larger-than-expected AI/data-center investment boom, more resilient domestic demand and weaker-than-forecast productivity growth, he adds. ([email protected]; @JamesGlynnWSJ)1730 ET - The confluence of factors driving bond yields sharply higher since late August are showing few, if any, signs of abating, ANZ says in a note to clients. The AI investment cycle remains strong and geopolitical risks remain elevated. Traditional investor appetite for sovereign debt is subdued, and in some instances falling, and central banks are on a tightening path. So, bond prices are naturally resetting, ANZ says. The era of cheap money is over and the dislocation in geopolitics and preponderance of negative supply-side shocks suggests that will remain the case for the foreseeable future, ANZ says. ([email protected]; @JamesGlynnWSJ)