0853 ET - Private employers added 98,000 jobs in June according to the latest ADP private payrolls report following a 122,000 gain in May. Economists polled by WSJ were expecting 110,000 in June. "The pace of hiring is telling a story of both supply and demand. We know it's taking people longer to find work, but there also are signs of labor supply constraints in certain industries," says Dr. Nela Richardson, Chief Economist of ADP in the report. June payroll numbers from the U.S. Labor department are due on Thursday and economists polled by WSJ expect 115,000 versus May's 172,000. The 10-year yield is 4.49% versus 4.42% Tuesday. The two-year yield is 4.19% compared to 4.14%. (patrick.sheridan@wsj.com)
0805 ET - Bitcoin remains under pressure after reaching a 21-month low overnight. Expectations that the Federal Reserve could raise interest rates are contributing to the cryptocurrency's weakness. Sentiment also isn't helped by news that crypto-hoarding company Strategy could sell bitcoin to raise more cash, Trade Nation's David Morrison says in a note. "This was something that company founder, Michael Saylor, said would never happen." Investors seem to be moving out of cryptocurrencies and piling into semiconductor stocks and anything related to AI, he says. Bitcoin drops 0.2% to $58,536, having dropped as low as $57,775 overnight, LSEG data show. (renae.dyer@wsj.com)
0740 ET - The euro falls to a one-year low against sterling and could stay under pressure in the near term as markets have turned overly negative on the eurozone while overlooking U.K. political headwinds, Monex Europe analyst Nick Rees says. "Eurozone inflation data just undershot forecasts and we see little chance the European Central Bank matches market pricing and hikes rates again." Any hints in this direction from ECB President Christine Lagarde later in the day at the ECB's forum in Portugal is likely to add pressure on euro-sterling, he says. The euro falls 0.1% to 0.8603 pounds, having earlier reached a one-year low of 0.8590, according to LSEG. (renae.dyer@wsj.com)
0710 ET - The European Central Bank is unlikely to raise interest rates in July following a soft inflation print, Tomas Dvorak at Oxford Economics says in a note. Eurozone inflation slowed more than expected in June to 2.8% from 3.2% in May. Services inflation also eased to 3.2%. "We think the decline is sufficiently broad to assuage worries about potential second round effects and cements our view that the ECB will hold rates in July," Dvorak says. Food price inflation also declined to 1.6%, and is expected to remain soft in the near term. "The improving inflation outlook means we don't expect any further rate hikes," Dvorak says. (don.forbes@wsj.com)
0640 ET - The Singapore-Taiwan corridor is emerging as one of Asia's fastest-growing trade and investment relationships, Ma Tieying, senior economist at DBS Group Research, writes in a note. Singapore's expanding role as a regional hub for information and communications technology products, and the deepening integration between Singapore's and Taiwan's semiconductor industries, are key drivers of bilateral trade growth, Ma says. Trade between the two economies is on track to double this year, while two-way investment flows are expected to more than double, the economist notes. Singapore is on track to be Taiwan's largest source of foreign domestic investment, Ma adds. "Their partnership is emerging as a critical node within Asia's evolving technology networks." (kimberley.kao@wsj.com)
0638 ET - Investors worry about possible inflationary pressures from an anticipated increase in U.K. government spending, UBS Global Research strategists say in a note. The government announced a 15 billion pounds ($19.9 billion) defense investment plan for the current parliamentary term which ends in fiscal year 2030. The U.K. has the largest share of inflation-linked debt among developed economies, causing investors to demand a term premium on U.K. government bonds, the strategists say. (miriam.mukuru@wsj.com)
0636 ET - Increasingly powerful artificial intelligence tools won't inevitably translate to faster economic growth, OpenAI Chief Economist Ronnie Chatterji says at the ECB Forum on central banking in Sintra. Without innovation, investment and adaptation at all levels of the economy, higher output is likely to face bottlenecks, he says. Chatterji gives the example of the pharmaceutical industry, which may be able to speed up drug discovery with the use of AI, but will still face manufacturing, infrastructure, testing and regulatory hurdles. Where possible, policymakers and organizations should work to ease these bottlenecks, he says. "We could have amazing intelligence, super-capable intelligence. I would argue even today it's super capable, but... a big piece of GDP growth comes through accelerating innovation," Chatterji says. (don.forbes@wsj.com)
0635 ET - Europe will have a big role to play in the next stage of the artificial intelligence economy, OpenAI Chief Economist Ronnie Chatterji says at the ECB Forum on central banking in Sintra. Europe has lagged the U.S. in foundational AI research, but the next stage of innovation lies in diffusion across the economy, Chatterji says. Here, Europe could have a competitive advantage, with its deep network of industrial firms, research institutions and sector expertise able to capture significant value further down the AI value chain. Chatterji notes companies such as BBVA, Deutsche Telekom, and Orange as examples of companies that are adopting AI aggressively. Sectors such as finance, consulting, insurance, manufacturing and robotics are key areas where AI adoption could boost growth, he says. (don.forbes@wsj.com)
0628 ET - U.S. Treasury yields and the dollar rise in European trade, helped by U.S. rate-hike expectations but also likely by position adjustments as a new quarter gets underway. Recent solid U.S. data maintain expectations that the Federal Reserve will raise interest rates. "The dollar has pushed higher against every G-10 peer as investors wait for the next steer from central-bank speakers, including Fed Chair Warsh," Tickmill's Patrick Munnelly says in a note. The two-year Treasury yield rises 3.3 basis points to 4.172%, while the 10-year yield is up 4.3 basis points at 4.465%, according to Tradeweb. The DXY dollar index rises 0.2% to 101.389. (emese.bartha@wsj.com)
0606 ET - Inflation in the eurozone is falling significantly, Stephanie Schoenwald at KfW Research says in a note. With the peak of the energy shock now behind us, significant second-round effects on the labor market can be largely ruled out, she says. Eurozone inflation slowed faster than expected in June to 2.8% from 3.2% in May. "This reduces the likelihood of a further interest-rate hike by the ECB," Schoenwald says, noting that a hike in July now looks remote. Still, more monetary tightening down the line cannot be ruled out. "Only the data from the coming weeks and months will reveal how much additional price pressure the four-month high in energy prices is still exerting on the economy." (don.forbes@wsj.com)
0536 ET - RHB maintains a cautious view on Indonesia's external trade outlook in 2H after the country posted its first monthly trade deficit since 2020 in May, economist Wong Xian Yong says in a note. Weaker commodity prices, softer external demand and stronger imports are expected to narrow the trade surplus, he says. Palm oil exports could be constrained by higher domestic biodiesel consumption, while lower nickel prices might weigh on export values despite a recovery in shipment volumes, he reckons. Changes in U.S. trade policy and tighter government oversight of commodity exports could add volatility to trade flows, he adds. (yingxian.wong@wsj.com)
0535 ET - The South Korean won is nearing its weakest level against the U.S. dollar in 17 years. The dollar earlier rose to an intraday high of about 1,559 won on the first trading day of July after climbing to around 1,562 won in June, its highest level since 2009, LSEG data show. The greenback traded at 1,596.90 won on March 6, 2009, the data show. "Strong U.S. employment data and higher interest rates continue to support the U.S. dollar," KB Kookmin Bank FX economist Lee Min-hyeok says in a note. "On the supply-and-demand front, a tug-of-war persists between foreign investors' equity sales and exporters converting dollar proceeds into won," Lee adds.(kwanwoo.jun@wsj.com)