The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1441 ET - It's time for fixed-income investors to buy into the two- to seven-year section of the yield curve, Angel Oak's Clayton Triick says, as his team adapts to the recent bonds selloff. "Why do you need to go to 10 years?" since yields are attractive with less duration risk, he says. Triick likes "investment-grade, fixed-rate bonds in agency mortgages as well as securitized credit like [asset-backed securities and] non-agency mortgages." He says investors can get 6% to 10% yield on these assets. "So this reset is setting up for a very high single-digit number in a pretty low-risk, diversified strategy." (paulo.trevisani@wsj.com; @ptrevisani)
1411 ET - Gold futures snap a four-session losing streak as the U.S. dollar pulls back following four straight sessions of gains. Front-month gold gains 0.5% in New York to $4,286.20 a troy ounce, for a weekly loss of 2.3%. Silver rises 1.2% to $64.245 a troy ounce, ending the week down 3.5%. "Looking ahead, further softness in oil, the dollar and yields could support bullion, while stronger data and hawkish Fed guidance remain headwinds," Kaynat Chainwala of Kotak Neo says in a note. (anthony.harrup@wsj.com)
1243 ET - Higher U.S. Treasury yields are raising the bar for U.S. stocks to maintain investors' attention, The Revacy Fund's Zaheer Anwari says in a note. That's particularly true for growth and technology stocks, where valuations depend more heavily on earnings that are set out further in the future, Anwari says. Investors have now been handed an opportunity to get increasingly competitive returns from Treasurys and avoid equity risk, he says. That doesn't automatically mean that equities are on the out, but it does make market leadership more selective, Anwari says. He is focusing on the strongest stocks in the strongest sectors. "We allow price to tell us when that trend has changed rather than reducing exposure simply because yields are elevated," Anwari says. (dean.seal@wsj.com)
1226 ET - Bitcoin ETFs are showing net inflows for six consecutive days totaling over $2.8 billion, according to data from Coinglass, however the inflows have slowed over the past three sessions the crypto analytics provider says. The trend leaves the cryptocurrency "exposed to downside risk if the macro backdrop deteriorates," says Joseph Dahrieh of Tickmill in a note. Bitcoin is down 0.4% to $83,977. (kirk.maltais@wsj.com)
1119 ET - Gold futures are higher after four sessions of declines as the U.S. dollar slips and oil prices tread water awaiting clarity on U.S.-Iran diplomacy. "A stronger dollar not only weighs on gold because the metal is priced in U.S. dollars, but also reflects the flow of global liquidity toward U.S. assets, particularly in an environment of rising yields and growing expectations that interest rates will remain elevated," Rania Gule of XS.com says in a note. "I believe any meaningful short-term recovery in gold will first require genuine signs of weakness in the dollar, rather than merely a temporary pause in its advance." Gold for December delivery is up 0.4% in New York at $4,315.50 a troy ounce. Silver is up 1.1% at $64.705 a troy ounce. (anthony.harrup@wsj.com)
1102 ET - An unprecedented global capex cycle drives the resilient U.S. expansion fueling recent market trends, Deutsche Bank's George Saravelos says in a note. AI and government spending underpin the cycle, which Saravelos says constitutes a rare event. "CapEx booms tend to be sustained, multi-year events," he says, adding that the current capex boom may be one of the largest after World War II reconstruction and it could last for years. However, the dollar has trended weaker through previous capex cycles. "We would not chase the dollar higher after the last few weeks' repricing," Saravelos says. The WSJ Dollar Index falls 0.3%. (paulo.trevisani@wsj.com; @ptrevisani)
1052 ET - Bitcoin is down 1% in morning trade, to $83,508. While bitcoin has been sliding since rising to as high as $87,000 early this week, analysts don't expect it to completely reverse these gains. "We would treat a retracement toward $80K as an accumulation opportunity rather than a failure of the breakout," says Colin Basco of Coinbase Institutional in a note. Basco adds that the market sentiment around bitcoin is decidedly more positive than the price action seen in the token supports. "Sentiment has run ahead of positioning," says Basco, noting that CoinMarketCap's Fear and Greed index is firmly in 'greed' territory. Ethereum is flat at $2,684, XRP is up 2.6% to $1.57, and solana rises 1.8% to $118.91. (kirk.maltais@wsj.com)
0911 ET - The federal government deficit in Canada widened in the last quarter with a rise in expenses. Statistics Canada data show the general government surplus across the country grew C$2.3 billion on-year to C$10.5 billion in 2Q, excluding social security funds, representing 1.2% of nominal GDP. Yet the federal deficit expanded C$1.1 billion to C$4.1 billion, or 0.5% of GDP. Federal government revenue rose 5.6%, driven by an increase in taxes on income, profits and capital gains, but that was outpaced by a 6.3% rise in total expenses that was led by social benefits thanks to payments under Ottawa's Groceries and Essentials Benefit. Federal government net debt increased by 5.7% on-year to hit C$1.05 trillion as liabilities rose largely due to an increase in debt securities. (robb.stewart@wsj.com; @RobbMStewart)
0903 ET - Treasury yields ease slightly as oil prices ease following reports that U.S. and Iran are discussing a deal to reopen Hormuz. Durable goods orders were unchanged in August, beating WSJ consensus forecast of a small drop. The University of Michigan consumer sentiment index due at 10 a.m. ET is expected to move lower and an upward surprise could trigger another bond selloff, as a resilient economy is perceived as likely to spur rate hikes by the Fed, underpinning the recent increase in yields. The 10-year yield is at 5.179%, down from a 19-year intraday high of 5.224% reached Thursday. The two-year is at 4.899%, after reaching 4.943% late yesterday. (paulo.trevisani@wsj.com; @ptrevisani)
0900 ET - Institutional demand for ether is improving, offsetting the impact of tighter U.S. financial conditions, Zaye Capital Markets analyst Naeem Aslam says in a note. Recent exchange-traded fund inflows, corporate treasury accumulation and ether's ability to retain most of its weekly advance suggest institutional participation has improved materially, he says. If ETF inflows remain positive and large holders continue accumulating ether while the cryptocurrency holds above $2,600-$2,650, it could rise above $2,800 and potentially $3,000, he says. If institutional flows reverse or higher U.S. yields trigger broader crypto deleveraging, that support would weaken, he says. Ether rises 1.1% to $2,714, LSEG data show. (renae.dyer@wsj.com)
0859 ET - Positive sentiment around bitcoin could build if it can consolidate around, or preferably above, the key $80,000 level, Trade Nation's David Morrison says in a note. Bitcoin's sideways movement from early July to mid-August was an extended period of consolidation which helped to build momentum for its surge higher, wiping out bets against bitcoin and providing a basis for fresh buying, he says. A similar consolidation could help bitcoin, he says. Bitcoin rises 0.1% to $84,457 after reaching its highest level since January at $87,315 Monday, LSEG data show. (renae.dyer@wsj.com)
0754 ET - Many investors and traders are likely looking forward to closing out a brutal week for bonds, but next week another potential worry awaits, September payrolls. "Given the decline in initial and continuing jobless claims over the month, the risk of a stronger September reading is rising, which could justify markets pricing in a high probability of an October hike," says JPMorgan in a note. But the economists at Barclays aren't convinced the Fed will move next month. "We expect the FOMC to remain mindful of inconsistencies between the payroll and household surveys, where we expect another flat reading for the unemployment rate (at 4.1%) amid low labor supply growth. In our view, this combination would keep an FOMC hold in play for the October meeting, as it continues to assess data developments, before proceeding with a 25bp rate hike in December."
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