The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0646 GMT - Bitcoin rises slightly but struggles for a meaningful recovery as investors balance improving institutional adoption against deteriorating macroeconomic conditions, Zaye Capital Markets analyst Naeem Aslam says in a note. "President Trump's declaration that the U.S. is not negotiating with Iran, alongside warnings that further developments could occur relatively soon, has intensified concerns about Middle Eastern energy supplies." Nevertheless, U.S. spot bitcoin exchange traded funds attracted about $1.08 billion across three sessions, suggesting institutional accumulation has continued, he says. U.S. PMI data at 1345 GMT could help determine bitcoin's moves ahead of the Federal Reserve's October 28 decision, he says. Bitcoin rises 0.7% to $81,738, LSEG data show.(renae.dyer@wsj.com)
0625 GMT - The dollar recovers after reaching a three-week low against a basket of currencies on Thursday as Treasury yields rise and oil prices jump. Fresh tensions in the Middle East propelled Brent crude prices to their highest levels since May, above $114 per barrel. Higher oil prices support the dollar as the U.S. is a net oil exporter while the currency tends to act as a safe haven. Concerns about French debt and civil unrest also weigh on the euro and lift the dollar. The DXY dollar index rises 0.1% to 101.691, having reached a three-week low of 101.446 Thursday driven by concerns about AI investments. (renae.dyer@wsj.com)
0602 GMT - The key catalysts for the currency market for next week will include whether tech stocks extend losses on AI-related jitters, whether French bond yields rise further due to fiscal concerns, and upcoming policy meetings by the Bank of Japan and Federal Reserve, Mizuho Securities analysts say. While higher crude oil prices could make the BOJ more hawkish, lower stock prices imply a tightening of financial conditions and serve as a dovish factor, they say. "If there is a clear hint about the possibility of a December rate hike-which is nearly 80% priced in by the OIS market-it would be seen as hawkish and could put upward pressure on the yen," they say, adding that without such a signal, the Japanese currency could face renewed weakness. Mizuho expects the dollar to trade around Y158.00 at the end of December. The pair was last trading at Y156.95. (megumi.fujikawa@wsj.com)
0559 GMT - The European Central Bank would not hesitate to intervene if monetary policy transmission were impaired, but TwentyFour Asset Management doesn't see evidence of this happening yet, says portfolio manager Felipe Villarroel in a note. French government bond yields and spreads have hit key levels, raising investor concerns about potential contagion. "If there were disorderly reactions in Italian and other government bond markets, then the ECB's first steps would likely be an attempt to calm markets with verbal intervention, or a reduction or termination of its quantitative tightening (QT) program," he says. (emese.bartha@wsj.com)
0558 GMT - Investors remain cautious over French government bonds, or OATs, waiting for greater clarity or even better entry levels, Societe Generale rates strategists say in a note. Although the strategists see some selective appetite for front-end OATs, they remain defensive on OATs given the fiscal and political risks, they say. They also warn of new waves of volatility, "given uncertainties about next social protests, the budget adoption and investors not yet keen to add a lot of risk." (emese.bartha@wsj.com)By Emese Bartha U.S. Treasury yields edged higher in Asian trade on Friday, having slid sharply on Thursday as investors sought safe havens from the turmoil in French government bonds.
The 10-year Treasury yield, which fell below 5% for the first time in a month on Thursday, traded 1.5 basis points higher at 4.967%, according to Tradeweb. The 10-year Treasury yield declined 19.3 basis points on Thursday in its largest one-day fall since March 2023.
Investors' concern over France's fiscal challenges and the risk that high oil prices could dent economic growth have prompted a search for safe haven investments, and U.S. Treasurys were beneficiaries of that.
"The market has real concerns about the French fiscal situation," said Maria Llerena, director of financial research at Domini Impact Investments.
Protests, a government trying to pass a budget and presidential elections in the spring of 2027 "complicate things further."
Sharp selloffs pushed the 10-year French OAT yield to 5.142% on Thursday, the highest level since 2002, while the 10-year OAT-Bund yield spread widened to 177 basis points, the widest since late 2011, according to LSEG.
On Friday, Moody's Ratings will review France. The ratings firm has an Aa3 rating with negative outlook on France, "and there is a significant likelihood of a downgrade," said Jens Naervig Pedersen, director in fixed income and forex research at Danske Bank, in a note.
A downgrade, however, is fully priced in and it should not have a significant impact, he said, shifting the focus on the outlook of the rating.
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