The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1921 ET - The Reserve Bank of New Zealand has left current rules governing home-loan limits unchanged. The RBNZ's financial policy committee says it will maintain current loan-to-valuation ratios. The FPC considered house-price developments, the risk profile of recent mortgage lending, financial strain among existing borrowers and the resilience of the banking system, the RBNZ says. Housing risks are currently contained and house prices have remained broadly flat in recent years. Mortgage-lending growth has been modest and the share of higher-risk lending remains manageable, it says. Current debt-to-income restrictions also remain in place, it adds. (james.glynn@wsj.com; @JamesGlynnWSJ)Global equity market participants are starting to look back over their shoulders at the Middle East conflict. It's having less impact on sentiment as the gaze of traders returns squarely to artificial intelligence, and the opportunities it represents, says Steve Chiavarone, Deputy CIO for Global Equities at Federated Hermes. While the Iran conflict certainly retains the ability to impact the spot oil market, the medium-term trend of disinflation remains very much intact, he adds. The futures market for oil remains much calmer, with the December futures contract never trading above 85 US dollars per barrel this year, he adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
1815 ET - Sales to China played a role in boosting Applied Materials' revenue in the third quarter, and are expected to keep growing, CFO Brice Hill says on a call Thursday. Across the company's two main segments--semiconductor systems and applied global services--China represented 26% of revenue, he says. The company's China revenue should grow this calendar year, boosted by investments in the 28-nanometer foundry-logic process, Hill says, and continue growing next year. Shares are off 5% at $508.00 after-hours. (elias.schisgall@wsj.com)
1547 ET - Treasury yields keep falling as U.S. inflation moderates while the U.S.-Iran standoff continues. Odds of a Fed hike in September slip to 35% from 41% yesterday, according to CME, as markets increasingly bet on another hold. A 30-year Treasury auction has a high yield of 5.216%, the highest since 2001, though it was similar to current market pricing, indicating steady demand. The yield settles down 0.034 percentage point, at 5.212%. The University of Michigan consumer sentiment index is expected to edge higher to 54.5 from 54.4, according to WSJ consensus. The 10-year falls 0.051 p.p., to 4.640%, and the two-year slips 0.059 p.p., to 4.139%. (paulo.trevisani@wsj.com; @ptrevisani)
1503 ET - Livestock futures on the CME settled lower for the day, with live cattle and lean hog futures tumbling as the day progressed. For both contracts, the main push lower is stagnant consumer demand for beef and pork, the Hightower Report says in a note. Cutout prices for both are weaker, even though the Labor Day holiday is fast approaching, which is typically the last day of the grilling season in the U.S. Live cattle futures finished trading down 1.6% to $2.203 a pound, while hogs closed down 1.7% to 82.175 cents a pound. (kirk.maltais@wsj.com)
1459 ET - Crude futures settle lower after a string of gains with the U.S. and Iran both claiming to have control over the strategic Strait of Hormuz. "The stalemate in crude price movements comes at a time when we see no horizon for a return of constructive diplomatic momentum or a return to broad escalation, at least in the very short term," XS.com senior market analyst Samer Hasn says in a note.That will keep the region "in a state of no peace and no war," he says, with the possibility of major escalation keeping the risk premium high. The IEA's and OPEC's lowering of their demand forecasts, and the unexpectedly large build last week in U.S. crude inventories, could prevent sharp rises in oil prices, he adds. WTI settles down 2.4% at $81.25 a barrel and Brent falls 2.1% to $87.07. (anthony.harrup@wsj.com)
1445 ET - U.S. natural gas futures retreat after the EIA reports an above-estimate 36 Bcf weekly inventory build, extending the storage surplus to 198 Bcf from 195 Bcf, despite hot weather spurring high electricity demand. "What made today's EIA report probably sting a little more was optimism power burns have tightened over the past 1-2 weeks, which the EIA report suggested wasn't the case," NatGasWeather.com says in a note. "And it hasn't helped that wind energy generation has been strong the past few days when demand has been strong," including across Texas, the forecaster adds. Nymex natural gas settles down 2.7% at $2.727/mmBtu.(anthony.harrup@wsj.com)
1434 ET - Bitcoin edges down, but the factors that have supported the cryptocurrency on a fundamental level for years continue to stay in place, says Grayscale Research in a note. Head of research, Zach Pandl, says that there's still 3 big reasons for investors to be interested in crypto. He says "unchecked" government deficits continue to trend higher, making bitcoin ownership more attractive. Trading of perpetual stock futures on various blockchain has also supported the proliferation of cryptocurrencies into the mainstream, and there is also growing risk tolerance among young investors. This current period of low volumes and rangebound prices for bitcoin won't last, Pandl adds. (kirk.maltais@wsj.com)
1425 ET - Bitcoin is down 0.6% to $63,160, keeping rangebound amid a summer lull in trading volume. Bitcoin's relationship to macroeconomic conditions is slowly changing, says James Butterfill of CoinShares in a note--with bitcoin slowly retaking its role as a risk asset. But Butterfill says it is hard to make a lot of smart assessments around bitcoin, because of low liquidity in trading. This includes bitcoin ETFs, which have had a mixed week in terms of inflows versus outflows, according to data from CoinGlass. "This week looks set to finish with modest outflows of around US$150M, following inflows last week," says Butterfill. "In the context of exceptionally thin summer trading, we do not view that as evidence of a meaningful reversal in sentiment." (kirk.maltais@wsj.com)
1127 ET - Some Gen Zers are adding sports betting to their list of financial planning strategies, according to a survey from wealth and savings platform Betterment. The survey found that 26% of Gen Z investors treat sports betting as a deliberate part of their long-term financial strategy, and 52% have redirected money originally intended for investing toward it in the past year. "Younger investors deserve access to the tools and information that meet them where they are, but the industry also has a responsibility to be clear about the difference between participating in a trend and building lasting wealth," said Sarah Levy, CEO of Betterment. The online survey was conducted among 1,000 U.S. retail investors evenly split across four generations. (jessica.coacci@wsj.com)
1111 ET - Yields on U.K. and eurozone government bonds fall as weaker-than-expected U.S. producer price index data for July reduce prospects of a Federal Reserve rate increase next month. Monthly PPI was flat in July, weaker than the 0.2% consensus forecast by economists in a WSJ poll. It's now looking "far less likely" that the Fed will feel it needs to hike interest rates as soon as September, Capital Economics' Stephen Brown says in a note. U.S. money markets price only a 35% chance of a September rate hike, LSEG data show. Ten-year gilt yields fall 2.7 basis points to last trade at 4.941%, Tradeweb data show. Ten-year German Bund yields fall 3.3 bps to 3.126%. (miriam.mukuru@wsj.com)
1057 ET - Canada's dairy farmers raise a stink over possible agricultural concessions the country's negotiators are prepared to make to the U.S. to secure tariff relief on key industrial sectors. "Our national food sovereignty is not up for negotiation," says David Wiens, head of the influential Dairy Farmers of Canada. "It is imperative that no more concessions on dairy" are made. The Trump administration is set next week to impose 50% tariffs on certain Canadian goods in response to Canada's alleged mistreatment of US dairy products, automobiles and alcohol. Canadian officials say they are unwilling to upend the country's supply-management system, whereby government agencies set dairy prices, enforce production quotas, and limit dairy imports. Canadian and US negotiators are in talks in Washington, to avoid the imposition of new 50% duties.
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