Bitcoin Expected to Reach New All-Time Highs in 2H — Market Talk

1150 GMT - Bitcoin is likely to reach new all-time highs in the second half of this year as flows from bitcoin exchange traded funds and corporate treasury buying rise, Standard Chartered's Geoff Kendrick says in a note. These flows totalled $245,000 in the second quarter and could exceed that level in the third and fourth quarters, he says. Bitcoin would also rise if President Trump announces Federal Reserve Chair Jerome Powell's replacement early as it could prompt markets to price in more interest rate cuts sooner. The potential passage of the U.S. stablecoin bill would also support bitcoin. StanChart expects bitcoin to rise to $135,000 in the third quarter and $200,000 by year-end. It last trades up 1.7% at $107,790. (renae.dyer@wsj.com)

1148 GMT - The euro-denominated credit market is expected to expand considerably as more global investors favor euro credit over U.S. dollar credit, Deutsche Bank credit strategists say in a note. Investors are lowering their U.S. investments due to uncertainty around the country's trade policies and economic outlook. The dollar credit market is likely to remain dominant over the next decade, but the gap between the dollar market and the euro market is likely to narrow over the coming years, the strategists say. (miriam.mukuru@wsj.com)

1117 GMT - The dollar recovers marginally as U.S. data in the previous session argue against imminent interest rate cuts by the Federal Reserve, ING analyst Francesco Pesole says in a note. The job openings and turnover survey and ISM manufacturing index both exceeded expectations. "Dollar downside risks are slightly reduced after yesterday's data, but things can change rapidly should today's ADP payrolls surprise on the soft side." The ADP report at 1215 GMT isn't a perfect indicator of the nonfarm payrolls data on Thursday but markets are highly sensitive to jobs figures as they are central to rate expectations, he says. The DXY dollar index rises 0.1% to 96.916 after hitting a three-year low of 96.377 Tuesday. (renae.dyer@wsj.com)

1102 GMT - Rising demand for euro-denominated credit over dollar-denominated credit is likely to boost performance of euro credit over U.S. dollar credit, Deutsche Bank credit strategists say. Euro investment-grade credit monthly inflows are estimated to rise by an average of 3.9 billion euros and euro high-yield credit by an average of 0.4 billion euros each month, the strategists say in a note. More corporates are also likely to issue credit in the euro market, raising net bond supply in the region. (miriam.mukuru@wsj.com)

1100 GMT - It is currently unclear how carbon-dioxide emissions can be reduced by 90% across Europe by 2040, Hildegard Mueller, head of the German Association of the Automotive Industry, says in a statement. "Brussels must do more than simply set or propose ever more ambitious targets; the European Union must ensure that these can actually be achieved," Mueller says. "Regulation alone is not policy." Nevertheless, the association stands by the Paris climate protection goals, Mueller says. The EU also targets a 55% reduction by 2030. (nina.kienle@wsj.com)

1000 GMT - Debt sustainability is a major concern and deserves serious debate, both in the U.S. and elsewhere, Degroof Petercam Asset Management's Sam Vereecke says in a note. The most prudent path is fiscal discipline, the CIO for fixed income says. Current yields make bonds appealing, although many investors remain cautious and are wary that yields could rise, he says. The key uncertainty for investors is gauging what the peak levels in yields will be and the point at which it is worth buying the bonds again, he says.(emese.bartha@wsj.com)

0959 GMT - U.S. Treasurys are expected to struggle in the remainder of the year, despite their recent strong run, Capital Economics' Thomas Mathews says in a note. "Treasuries' weeks-long rally seemed to have hit pause," the head of markets for Asia Pacific says. Federal Reserve Chair Jerome Powell's comments at the European Central Bank's meeting in Sintra, Portugal, seemed to be one trigger to pause the rally. Powell expressed no rush to cut interest rates as long as the economy is solid. "For our part, we're skeptical that the Fed will have the evidence it needs to cut rates before next year, and also that it will relent to political pressure," he says. Capital Economics doesn't expect the Fed to cut rates until next year. (emese.bartha@wsj.com)

0946 GMT - Investors' switch away from the dollar and from U.S. assets could hurt dollar-denominated investment-grade credit more than their high-yield peers, Deutsche Bank credit strategists say in a note. The U.S. investment-grade credit market has a lager share of international investors than the riskier high-yield market, the strategists say. Investors are rebalancing portfolios away from U.S. assets due to concerns about policy uncertainty under President Trump and risks to the U.S. economy. "'Dedollarisation' should affect investment-grade markets more than high-yield markets," the strategists say. (miriam.mukuru@wsj.com)

0935 GMT - Base metal prices are mixed, with LME three-month copper flat at $9,945 a metric ton and LME three-month aluminum down 0.4% at $2,592.50 a ton. Copper and aluminum are 2.9% and 1% higher on-week, however, on a weaker U.S. dollar and concerns of supply tightness for copper. Copper tested the $10,000-a-ton level in the prior session for the first time since March as the metal continues to flow to the U.S. ahead of a potential import tariff. Spot prices for copper are elevated, up 0.2% at $10,061 a ton, as LME and Shanghai Futures Exchange warehouses continue to deplete in order to fuel the U.S. import demand. Refined copper demand has also increased outside the U.S., with three-month Chinese solar installations increasing 150% and air conditioning sales up 8% on year. (joseph.hoppe@wsj.com)

0928 GMT - The euro could rise to the key $1.20 level if U.S. nonfarm payrolls data Thursday are weaker than expected, ING's Francesco Pesole says in a note. The euro-dollar exchange rate remains largely driven by the dollar's performance, he says. European Central Bank policymaker Luis de Guindos told Bloomberg the euro's current levels weren't a concern but suggested an advance above $1.20 could prove more complicated. The risks surrounding a stronger euro were also recently highlighted by ECB officials Gediminas Simkus and Martins Kazaks. "It will be worth watching whether a move to $1.20 elicits stronger pushback from policymakers," Pesole says. The euro falls 0.3% to $1.1767 after reaching a nearly four-year high of $1.1829 Tuesday, LSEG data show. (renae.dyer@wsj.com)

0927 GMT - This week's strong JOLTS job openings data suggest the U.S. labor market remains resilient, with no urgency to cut rates, Brown Brothers Harriman's Elias Haddad says in a note. Federal Reserve Chair Jerome Powell also stressed prudency about waiting with interest-rate cuts as long as the U.S. economy is in solid shape, the market strategist says. Political interference remains a risk, however, with President Trump calling for lower rates and criticizing Powell. "[Powell's] wait-and-see message is drowned out by political pressure to lower the funds rate," Haddad says. (emese.bartha@wsj.com)

0918 GMT - Uncertainties linger despite China and the U.S. signing an agreement on a trade framework last month, HSBC economists say in a note. "Ultimately, businesses' long-term investment decisions need more certainty through a clear longer-term negotiating plan between China and the U.S., as well as final tariff agreements between the U.S. and its other trading partners," the economists say. The deadline for trade-deal negotiations is coming up next week, and President Trump has said this week that he doesn't plan to extend the tariff deadline. Uncertainty around U.S. levies on other countries poses risks to global demand, and in turn to demand for Chinese goods, HSBC says. The bank forecasts China's exports to fall 2%-3% on year in 2H. (tracy.qu@wsj.com)