The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1039 ET - If U.K. Treasury Chief John Healey delivers prudent government spending and revenue plans at the October 28 budget, U.K. assets could gain, UBS Global Wealth Management's Dean Turner says in a note. U.K. government bonds carry a fiscal risk premium, which could begin to decline if investors are reassured about the fiscal sustainability, Turner says. "The upcoming budget is primarily about fiscal credibility; the size of the buffer matters less." U.K. ten-year government bonds hit a 19-year high of 5.527% last week, according to LSEG data, mainly due to inflation concerns and geopolitical uncertainty. They last trade down 1.2 basis points at 5.443%. (miriam.mukuru@wsj.com)
1037 ET - The European Union's agreement with China to curb its exports of hybrid cars into the region could be a blueprint for future deals, Capital Economics says in a note Monday. "There is mounting pressure from other industries such as chemicals and machine tools for similar for protection," it says. The EU said it will cap hybrid and plug-in hybrid car imports from China at 350,000 units annually for four years. "If extended to all the industries that are targeted by the EU 's Industrial Accelerator Act this could potentially affect around a quarter of all imports, which would have a bigger impact on the wider economy," Capital Economics says, adding that it remains to be seen whether China will agree to similar restrictions on other and potentially much larger sectors. (edith.hancock@wsj.com)
1033 ET - Major Gulf stock markets end mixed Monday amid heightened regional security concerns, with Saudi Arabia's Tadawul All Share Index falling 0.7% following deadly Houthi attacks on Riyadh's international airport over the weekend. The attacks killed at least 13 people, adding to concerns over the impact of the conflict on the kingdom's economy and investment plans. Qatar's QE Index rises 1.2%, rebounding from a 1.5% decline in the previous session. In the U.A.E., Abu Dhabi's benchmark index declines 0.3% while the Dubai Financial Market General Index gains 0.3%. The U.A.E. economy grew just 0.4% on year in the first half, with second-quarter output contracting 2.1%, Emirates NBD Research says. (farhan.rafid@wsj.com)
1022 ET - U.S. pending home sales are down to their lowest level since spring 2014, Redfin says, with the exception of April 2020, when the onset of the pandemic ground the housing market to a halt. Pending home sales declined 4% from a month earlier in September, the biggest monthly drop in more than three years. Fewer homes went under contract in September largely because mortgage rates surpassed 7% by the end of the month. For the first time in three years, pending home sales declined in all 50 of the most populous U.S. metros. Closed home sales fell nationwide in September, declining 1.6% month-over-month. The weekly average mortgage rate climbed to 7.28% at the end of September, the highest level in three years. (chris.wack@wsj.com)
1018 ET - Trading over the weekend appeared to favor many altcoins, or tokens outside of bitcoin or stablecoins. Over the weekend, tokens for NEAR Protocol gained over 12%, to $5.66 currently. As of morning trade, volumes traded in NEAR are up just over 99%, putting them at around $3.5 billion -- the fifth-highest volume among cryptocurrencies, according to data from Coinglass. Other altcoins that posted a strong weekend include Celestia, Polkadot, Filecoin, and Aptos, says Bret Kenwell of eToro in a note.Bitcoin, meanwhile, is down 0.9% early, to $82,883. CoinMarketCap pegs its index scoring so-called "altcoin season" at 63-out-of-100. (kirk.maltais@wsj.com)
1016 ET - Recent attacks by Houthi rebels on Riyadh airport threaten to set back the recovery in Saudi Arabia's non-oil economy, even if the damage to the tourism sector proves to be limited, Capital Economics economist Jason Tuvey says. "Even if there are no further attacks, security fears may still deter tourists as well as business travel in the lead-up to the Future Investment Initiative due to take place later this month," he says in a note. The attacks are likely to heighten security fears, reducing footfall in sectors such as wholesale and retail trade, restaurants, and recreational services in particular. Still, the hit to non-oil GDP has been fairly limited, contracting by a modest 0.4% in the second quarter, Tuvey notes. (edward.frankl@wsj.com)
1008 ET - The Japanese yen could remain near current levels versus the dollar in coming months, ING analysts say in a note. Japan and the U.S. are uncomfortable with the dollar above 160 yen, they say. However, a move below 150 yen requires more caution from the Federal Reserve on raising interest rates and a much higher policy rate in Japan, they say. "That may not emerge until the second quarter of 2027." While growth in Japan is improving, the Bank of Japan probably isn't ready to accelerate tightening. The dollar rises 0.2% to a two-and-a-half-week high of 158.66 yen, LSEG data show, and ING expects it to trade at 158.000 over the next six months. (renae.dyer@wsj.com)
0957 ET - The Bank of England could avoid rapid interest-rate rises over the coming months if energy prices pull back significantly from current levels, AJ Bell's Russ Mould says in a note. Investors expect a 91% chance of a BOE interest-rate increase at the next meeting in November, and three more rate hikes by July 2027, LSEG data show. News about the U.S. deal with Russia to supply diesel caused oil prices to fall marginally in early Monday trade before turning higher again, with Brent crude last up 2.1% to $106.90 a barrel. (miriam.mukuru@wsj.com)
0954 ET - Bitcoin is stuck around the $83,000 mark, constrained by a mix of high U.S. interest rates and a 5.24% 10-year Treasury yield, XS.com's Simon-Peter Massabni says in a note. Those two factors have kept capital flowing in safer, interest-bearing assets instead of cryptocurrency as investors get more cautious about risk exposure, Massabni says. U.S. spot Bitcoin ETFs recorded $678.9 million in net outflows last week, he says. There's been a single session of positive flows, indicating that withdrawal pressure has eased, but that's not enough to show that demand through ETFs has recovered sustainably, Massabni says. (dean.seal@wsj.com)
0949 ET - Bitcoin is lower, but is still holding onto the $80,000 to $84,000 range. That's even as crude oil rises, a driver for inflation and a factor making assets like bitcoin less ideal to investors looking for more secure places to invest. Bitcoin's ability to maintain these levels is a positive sign for demand, says Lacie Zhang of Bitget Wallet in a note. "Bitcoin's ability to hold above the $80,000-84,000 area while Brent trades above $100-105 [a barrel] amid renewed Middle East tensions points to growing resilience and some degree of decoupling from traditional geopolitical risk," says Zhang. Bitcoin falls 1.2% to $82,643, while ethereum slides 0.2% to $2,530 and XRP is down 1.7% to $1.39. (kirk.maltais@wsj.com)
0928 ET - The Norwegian krone could rise further as fundamentals are supportive and oil prices remain elevated, ING analysts say in a note. Neither the risk of a rapid de-escalation in the Middle East conflict or a sharp oil price decline appear imminent at this stage, they say, noting Norway's position as a major oil and gas producer. Moreover, the krone benefits from a weaker euro on French fiscal concerns, which is offsetting the impact of a poorer liquidity environment, they say. The euro falls 0.1% to 10.6921 krone after earlier reaching a one-month low of 10.6835. ING expects it to reach 10.65 in one month and 10.50 in 12 months.(renae.dyer@wsj.com)
0927 ET - The Swedish krona could rise modestly if geopolitical tensions ease and French fiscal risks weigh on the euro for longer, ING analysts say in a note. The Riksbank is likely to raise interest rates by 25 basis points in November and signal further tightening, although external factors remain the main driver for the krona, they say. "While the krona remains a less attractive expression of eurozone fiscal risk than the franc or sterling, it was also notably cheap versus short-term fair value at the end of last month." The euro rises 0.1% to 11.2009 krona and ING expects it to reach 11.00 in six months and 10.75 in 12 months.
