Bitcoin Falls as Tariff Uncertainty Dampens Risk Appetite — Market Talk

0848 GMT - Bitcoin falls as uncertainty over U.S. tariffs keeps investors cautious over risky assets, including cryptocurrencies. A 90-day pause in higher U.S. reciprocal tariffs is due to end on July 9. Global governments are scrambling to secure trade deals with the U.S. ahead of this deadline. "The U.S. administration seems to be retreating from the idea of '90 trade deals in 90 days'," UBS Global Wealth Management's Paul Donovan says in a note. The U.S. has a half-hearted agreement with the U.K. and a de-escalation with China but little else, he says. Bitcoin falls 0.75% to $106,808, according to LSEG. (renae.dyer@wsj.com)

0838 GMT - The 10-year U.S. Treasury yield falls to a two-month low of 4.191%, down about 3 basis points on the day, according to Tradeweb data. Markets anticipate an accelerated pace of interest-rate cuts by the Federal Reserve this year. Money markets price in around three rate cuts this year and yields reflect this, says Kudotrade's Konstantinos Chrysikos. Fed Chair Jerome Powell is scheduled to speak at the European Central Bank's forum in Sintra, Portugal on Tuesday. "Markets will scrutinize any shift in tone [from Powell]," Chrysikos says. (emese.bartha@wsj.com)

0827 GMT - European defense stocks fall in early morning trade, amid reports that the European Union will accept Trump's 10% baseline tariff on many imports but will seek exemptions for some sectors including pharmaceuticals, alcohol, semiconductors and commercial aircraft. Thales loses 2.4%, Indra Sistemas and Saab fall 2.2%, Leonardo drops 2%, Rheinmetall is down 1.5%, Fincantieri loses 1.5%, Rolls-Royce trades down 1.1% and BAE Systems falls 0.8%. (cristina.gallardo@wsj.com)

0817 GMT - Yields on U.K. 10-year government bonds fall to their lowest in eight weeks after Bank of England Governor Andrew Bailey spoke of a weakening U.K. labor market in an interview with CNBC on Tuesday. The remarks could raise the prospect of more interest-rate cuts by the BOE in the coming months. U.K. money markets currently price in a 76% chance of a rate cut in August, LSEG data show. The 10-year gilt yields fall to an 8-week low of 4.425%, according to Tradeweb. They last trade down 5 basis points at 4.439%. (miriam.mukuru@wsj.com)

0801 GMT - Gold futures rise on increasing hopes of a U.S. interest rate cut and a weaker U.S. dollar. Futures are up 1.3% at $3,350.20 a troy ounce, and sit up 0.5% on week. The precious metal is rallying for the second day, as expectations grow that the Fed might resume loosening monetary policy later this year, MUFG analysts say in a note. Lower interest rates typically benefit non-interest bearing bullion. The market is now pricing in at least two cuts in 2025, with an upcoming U.S. jobs report seen as the key trigger, MUFG says. At the same time, trade uncertainty persists under President Trump's administration and the dollar has had its worst first-half performance since 1973, MUFG says. Both factors have supported gold's safe-haven demand. (joseph.hoppe@wsj.com)

0800 GMT - China's latest PMI data shows manufacturing bouncing back, but it could be short-lived, says Danske Bank's Allan von Mehren. As expected, export orders got a lift in June following the U.S.-China trade truce in mid-May. "On a less positive note, employment indices continued to be weak, which does not bode well for getting a more sustained lift to private consumption," the economist writes. An uncertain trade outlook and continued housing weakness are likely keeping companies from hiring. Furthermore, the improvement in retail sales is being driven by subsidies and China needs to keep consumer stimulus running until it translates into stronger job growth, he says. PMIs will likely show a bit more strength short term on the back of exports and stimulus, before declining as the trade-truce boost fades. (fabiana.negrinochoa@wsj.com)

0758 GMT - Thailand's tourism sector may rebound in 3Q, boosted by an upcoming government stimulus program, says Maybank Securities analyst Boonyakorn Amornsank in a note. He also expects higher short-haul visitor numbers in 2H, likely from Chinese tourists enticed by a Thai government push and Samui island's high season. His new top picks are hotel developer Erawan Group and hospitality group Central Plaza Hotel, as they should benefit from higher short-haul visitor numbers and the planned stimulus. Their valuations are also the cheapest in the sector, he adds. (megan.cheah@wsj.com)

0750 GMT - The U.S. dollar has had its worst first-half of any year since 1973, which is good news for India and other emerging-market assets, says Harsh Gupta Madhusudan at Ionic Asset by Angel One. "And 1973 is when currencies started floating. So effectively the worst half year ever," the fund manager writes in a note. A weaker USD tends to be good for EMs, attracting more foreign capital inflows and easing debt burdens. While nothing goes in a straight line up or down, Gupta thinks there is likely to be much more cyclical dollar weakness in the coming years, which will have a direct impact on Indian growth and risk assets--along with EM and non-U.S. assets more broadly--and a positive one at that, he adds.(fabiana.negrinochoa@wsj.com)

0730 GMT - Societe Generale's and Standard Chartered's credit valuations are better than their equity valuations, CreditSights analysts say in a note. Societe Generale's price-to-book valuations remain well below the European banks' average but its debt valuations are more positive, the analysts say. "We think the equity market is underestimating the recent strengthening and sustainability of the bank's capital and earnings." (miriam.mukuru@wsj.com)

0729 GMT - Consumer inflation in the Philippines likely rose slightly to 1.5% on year in June, up from 1.5% in May 1.3%, according to the median estimate of 11 economists polled by The Wall Street Journal. Headline inflation could have edged up due to higher food inflation, particularly from rice and egg prices, Nomura analysts write in a note. There may have also been a modest pickup in retail fuel prices, they say. The Philippine central bank cut its policy rate in June to boost the economy. The CPI data are due Friday.(amanda.lee@wsj.com)

0718 GMT - South Africa's coalition government averted a crisis at the weekend but its ongoing fragility could continue to weigh on the rand, Commerzbank's Volkmar Baur says in a note. The Democratic Alliance leadership decided to remain in the coalition at the weekend even after President Cyril Ramaphosa rejected the party's demands to dismiss African National Congress ministers under investigation for corruption. This demand came after Ramaphosa's dismissal of a Democratic Alliance minister sparked a rift within the coalition. "Each new government crisis not only increases volatility in the rand in the short term but also erodes confidence in the government's willingness and ability to tackle urgently needed reforms." The dollar falls 0.4% to 17.6693 rand. (renae.dyer@wsj.com)

0703 GMT - Indonesia's inflation outlook may remain subdued despite a June slight uptick, paving the way for a potential rate cut in 3Q, UOB economist Enrico Tanuwidjaja says in a note. With 1H inflation averaging just 1.18% on year, the economist lowers his full-year forecast to 2.2% from 2.4%. He expects weak consumer confidence and external uncertainty to keep demand sluggish. A relatively stable rupiah and easing price pressures strengthen the case for Bank Indonesia to cut rates by 25 bps to 5.25% in 3Q, UOB adds.(yingxian.wong@wsj.com)