0729 GMT - Yields on U.K. government bonds, or gilts, climb, tracking U.S. Treasury yields as investors raise bets on possible interest-rate rises by the U.S. Federal Reserve. U.S. economic data have been fairly solid while inflation risk lingers, increasing the prospect of a Fed rate hike. Ten-year gilt yields rise 4 basis points to last trade at 4.803%, Tradeweb data show. Ten-year U.S. Treasury yields climb 4.5bps to 4.467%. (miriam.mukuru@wsj.com)
0725 GMT - Indonesia's food inflation is expected to continue to rise in the coming months, driven mainly by supply-side pressures including adverse weather and elevated fertilizer costs, RHB economist Wong Xian Yong says in a note. Imported inflation remains an upside risk as a weaker rupiah raises the cost of imported goods, though pass-through is expected to be gradual, he says. Bank Indonesia might keep its benchmark rate unchanged in July as it assesses the impact of earlier tightening, but the central bank could remain ready to raise rates by 25 bps in 3Q if rupiah weakness intensifies, particularly if the dollar approach 18,000 rupiah, he adds. (yingxian.wong@wsj.com)
0716 GMT - China's official June PMI readings, the strongest since December, suggest the country's economy has regained some momentum, Capital Economics says. Julian Evans-Pritchard, head of China economics, says the uptick in the official manufacturing PMI was driven by a rise in export orders, reinforcing China's continued dependence on exports and AI-related tech. Meanwhile, falling energy prices have pushed both input and output price indexes lower, indicating producer prices may be slipping back toward deflation. Evans-Pritchard says growth in the IT and telecom sectors remains particularly strong, supported by the AI boom, while the data suggest the construction sector is shedding fewer jobs. (jason.chau@wsj.com)
0704 GMT - Bitcoin stays weaker after reaching a 21-month low overnight as expectations for U.S. interest-rate rises weigh. The Fed's signals about potential rate rises at the June meeting remains the dominant macro narrative with markets expecting tightening as soon as September, Nexo analyst Iliya Kalchev says in a note. "Thursday's nonfarm payrolls report, arriving ahead of the Independence Day holiday, is the next meaningful catalyst for the rate outlook that has weighed on crypto throughout June." Bitcoin falls 0.2% to $58,591 after reaching as low as $57,775 overnight, LSEG data show. (renae.dyer@wsj.com)
0700 GMT - Eurozone government bond yields open higher, tracking rising U.S. Treasury yields. Focus turns to the flash estimate of eurozone inflation, due at 0900 GMT. Headline annual inflation is expected to have decelerated in June to 3.0% from 3.2% previously, according to the Wall Street Journal's poll of analysts. Comments from the European Central Bank's forum in Sintra, Portugal could add some impulse to yield moves, too. The 10-year Bund yield rises 2.1 basis points to 2.883%, according to Tradeweb. (emese.bartha@wsj.com)
0648 GMT - The dollar rises as traders continue to bet on the Federal Reserve raising interest rates this year and digest the latest developments in the Middle East conflict. The dollar should remain strong until the Iran war is over, Commerzbank's Antje Praefcke says in a note. Only then would it become clear how prices will develop and whether rate-rise expectations are truly justified, she says. "We have our doubts about this and, as a result, see potential for a correction in the dollar." President Trump has weighed a return to all-out war with Iran but has decided to stick with diplomatic talks for now, the WSJ reports. The DXY dollar index rises 0.1% to 101.328. (renae.dyer@wsj.com)
0642 GMT - The Japanese Ministry of Finance's recent monthlong pause on foreign-exchange intervention was likely a strategic one rather than an approval of a weaker yen, says SMBC Nikko Securities economist Junichi Makino. The finance ministry likely judged that it would be wiser to pause currency intervention because expectations for higher U.S. rates would diminish the effectiveness of any intervention, Makino says. MOF data show it conducted no yen-buying operations between May 28 and June 26. The dollar was last trading at 162.71 yen. (megumi.fujikawa@wsj.com)
0634 GMT - The dollar looks deeply overbought against the yen, based on a relative strength index of 81.4 on daily chart, Sucden Financial's research team says in commentary. This raises the probability of a corrective pullback of the dollar toward the 20-day simple moving average near 161 yen or structural support at 161.20 yen, the team says. The U.S. nonfarm payrolls report due Thursday represents a key near-term catalyst, as strong data would reinforce hawkish Fed monetary-policy expectations and possibly lift the dollar above 163 yen, the team says. However, "a disappointing print could provide the backdrop for profit-taking at these extreme levels," the team adds. The dollar is 0.1% higher at 162.70 yen, LSEG data show. (ronnie.harui@wsj.com)
0611 GMT - Reserve demand and liquidity preference continue to underpin the U.S. Treasury market, with external investors favoring the front end of the curve, BNY's Geoff Yu says in a note. The immediate catalyst is this week's U.S. labor market data, the EMEA macro strategist says. "A resilient employment report would reinforce the current backdrop of anchored inflation expectations, supporting U.S. real yields, Treasury demand and, by extension, the dollar," he says. U.S. nonfarm payrolls data are due for release on Thursday. (emese.bartha@wsj.com)
0559 GMT - The Bank of Japan's tankan survey released Wednesday reflects Japanese firms' recent business conditions, including higher input costs, labor shortages and still-accommodative funding conditions. "These factors suggest that the Bank of Japan's June policy rate hike was appropriately timed," says Harumi Taguchi of S&P Global Market Intelligence. "While the outlook indicates that cost pass-through will continue, expectations for future borrowing interest rates are also rising," the economist says. "The Bank of Japan is likely to proceed with monetary normalization while closely monitoring the impact of higher interest rates, especially on small and medium-sized enterprises."(megumi.fujikawa@wsj.com)
0551 GMT - German Bund yields look set to open higher after the sharp U.S.-led correction over quarter-end, Commerzbank's Hauke Siemssen says in a note. Flash estimate eurozone HICP data--with the headline print expected to decelerate--argues for a stabilisation just below 2.9% for the 10-year Bund yield, the rates strategist says. "Bunds are under pressure and 10-year yields look set to break out of the recently established range today, opening just below 2.9%." The U.S.-led selloff will take its toll on Bunds this morning, he says. In supply, Germany will auction 3.5 billion euros in November 2032 Bunds. (emese.bartha@wsj.com)
0539 GMT - U.S. two- and 10-year Treasury yields hit one-week highs of 4.181% and 4.473%, respectively in Asian trade before coming off peaks. The rise in yields points to a solid U.S. economy coupled with inflationary pressure, while Middle East peace talks still see back-and-forth steps. President Trump has weighed a return to all-out war with Iran but has decided to stick with diplomatic talks for now, according to U.S. officials familiar with the discussion. On the data front, June employment data on Thursday are awaited to confirm continued strength of the labor market, even as some cooling is expected. Meanwhile, oil prices are edging up. The two-year Treasury yield is up 3.7 basis points at 4.175%, while the 10-year is up 4.3 basis points at 4.464%, according to Tradeweb. (emese.bartha@wsj.com)