Bitcoin Falls on Tariff Uncertainty — Market Talk

0655 GMT - Bitcoin falls as investors turn cautious ahead of the July 9 deadline when the pause in U.S. reciprocal tariffs ends. Only three trade agreements have been secured so far with Vietnam, China and the U.K., well short of expectations, IG analysts say in a note. This has prompted President Trump to shift tactics with plans to send letters to trading partners detailing new tariffs, they say. Meanwhile, the House approved Trump's tax-and-spending bill Thursday. It will add $3.4 trillion to national debt, raising inflationary concerns just as the economy shows strength, the analysts say. That reduces the prospect of interest rate cuts. Bitcoin falls 0.9% to $109,008 after reaching a five-week high of $110,585 Thursday, LSEG data shows. (renae.dyer@wsj.com)

0644 GMT - Demand from pension funds at this week's 10- and 30-year Japanese government bond auction was significant, but bidding from banks wasn't equally strong, says Citi Research's Tomohisa Fujiki in a note. The 10-year JGB auction saw a strong result, while the 30-year bond sale was weaker, he says. "We think there was significant demand from pension funds in both, but bidding by banks was probably the cause of the difference," the strategist says. The 10-year JGB yield is up 0.4 bp at 1.434%, while the 30-year JGB yield is up 1 bp at 2.865%, according to LSEG. (emese.bartha@wsj.com)

0632 GMT - The dollar retraces earlier gains driven by Thursday's better-than-expected nonfarm payrolls data as concerns over U.S. trade weigh. The end of a 90-day pause on so-called U.S. reciprocal tariffs is due to end on July 9. President Trump said he would start sending letters to trading partners from Friday, laying out the details of new tariffs. Meanwhile, Friday looks set to be a quiet day due to the July 4 U.S. holiday with the U.S. stocks and bond markets closed. The DXY dollar index falls 0.3% to 96.862. It reached a one-week high of 97.422 Thursday. (renae.dyer@wsj.com)

0622 GMT - The 10-year U.S. Treasury yield is expected to stay in the 4.0%-4.5% range in the coming months, Societe Generale's rates strategists say in a note. "While we expect a modest increase in term premia, the rise in long-end yields is likely capped and hence the steepening momentum is likely to wane," they say. Term premium is the additional yield investors demand to hold a long-dated bond rather than a short-dated one. The strategists expect the Federal Reserve to cut rates twice in 2H 2025 to counter the slowdown in growth and employment. The 10-year Treasury yield closed at 4.346% on Thursday, according to LSEG. (emese.bartha@wsj.com)

0603 GMT - The U.S.-Vietnam trade deal sends a strong signal that tariffs on other countries won't hover near the universal 10% mark--they will be higher, says Ipek Ozkardeskaya at Swissquote Bank. Trump earlier told reporters that the U.S. would start sending letters to countries detailing tariff rates, which could range from 60% or 70% to 10% and 20%. "We'll probably have 10 or 12 [letters] go out tomorrow, and over the next few days." Trump called the rates a "bargain," adding: "I don't want to stretch it too much. We want to keep it pretty reasonable." For smaller countries, tariffs would pretty much be kept the same, he said. Asked if there would be flexibility on when countries would start paying, he said: "Not really, they'll start to pay on August 1." (fabiana.negrinochoa@wsj.com)

0559 GMT - The outcome of trade negotiations remains the key uncertainty for eurozone rates markets in the near term, Societe Generale's rates strategists say in a note. The risk outlook for growth and inflation justifies a persistent pricing of at least one more interest-rate cut while at the long end, term premium is consolidating, they say. This backdrop drives the strategists to forecast the 10-year Bund yield to continue to trade in the 2.40%-2.80% range until the year-end. They also expect the yield curve to steepen further--implying the gap between short- and long-dated bonds to widen further. On Thursday, the 10-year Bund yield closed at 2.58%, according to LSEG. (emese.bartha@wsj.com)

0554 GMT - The threat to global growth from U.S. tariffs policy remains high, says Shane Oliver, chief economist at AMP. A 20% average U.S. tariff rate is well down on the 30% that would have applied post "Liberation Day," but it's well up on the 3% average U.S. tariff rate at the start of the year, he says. While share markets haven't been too fussed lately about tariffs, they still pose a significant threat to global growth and U.S. inflation. Any 60% or 70% tariffs will likely just be another negotiating ploy, but may be taken badly by share markets, Oliver adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)

0545 GMT - Eurozone government bond supply is set to slow down in line with the usual pattern in the coming weeks, potentially helping yield spreads to tighten, Societe Generale's rates strategists say in a note. "This [supply slowdown] could help spreads to tighten a bit more provided risk sentiment does not deteriorate," they say. The July supply picture is supportive for Italian and Spanish government bonds, in contrast with those of France and Germany, they say. "So we still see peripherals outperforming France in the near term," the strategists say. (emese.bartha@wsj.com)

0539 GMT - The argument made by some central bank watchers that the Reserve Bank of Australia should keep interest rates on hold next week in order to see more data isn't compelling, says Luci Ellis, chief economist at Westpac. Nothing the RBA will learn in the next five weeks will change the decision to cut, she adds. Ellis, a former RBA chief economist, says that this time around, the question boils down to, could the governor front a media conference and explain why she decided to wait another five weeks to cut rates when it was just a choice between now and August? Again, the answer is likely to be "no," Ellis adds. (james.glynn@wsj.com; @JamesGlynnWSJ)

0511 GMT - Some of the discussion ahead of the Reserve Bank of Australia's policy meeting on Tuesday surrounds the idea that it might wait until August to cut rates. This will allow it time to review 2Q CPI data later this month. However, Abhijit Surya, an economist at Capital Economics says he's not convinced by the argument. The recent flow of data continues to suggest that risks to the domestic economic outlook are skewed to the downside. The case for "front loading" policy easing remains the stronger one, he says in a note. (james.glynn@wsj.com; X @JamesGlynnWSJ)

0349 GMT - Ringgit may strengthen toward 4.20 versus the U.S. dollar next week, Kenanga IB economists say in a note. Ringgit may be supported by expectations that Bank Negara Malaysia will keep rates unchanged at 3.00% amid stable growth and potential inflation risks. Possible reciprocal tariffs of 10% affecting around 100 countries, likely including Malaysia, could support the ringgit as the rate is lower than the proposed 24%, they note. The trade and structural shifts, alongside steady domestic fundamentals, could attract foreign inflows, thereby bolstering ringgit sentiment, they add. Kenanga expects USD/MYR to face resistance at 4.24 and find support at 4.21 in the short term. USD/MYR is 0.2% higher at 4.2295.(yingxian.wong@wsj.com)

0345 GMT - Philippines headline inflation quickened from 1.3% on year in May to 1.4% in June, but stayed in line with the central bank's expectations, Goldman Sachs economists say. The uptick was driven by higher domestic fuel and electricity inflation, and partially offset by lower food inflation. Core CPI, which excludes volatile food and energy, was unchanged at 2.2%. Goldman Sachs continues to expect that the Philippines central bank will cut its policy rate by 25 bps once more this year, likely in 3Q. That would bring the rate to 5.0%. (ronnie.harui@wsj.com)