Bitcoin Falls Slightly After Hitting Nearly 8-Month High — Market Talk

0730 GMT - Bitcoin eases slightly after reaching its highest level since late January on Monday, driven by U.S. regulatory progress, stronger exchange-traded-fund inflows and a broad-based rally in risky assets. The pullback comes as oil prices rise following news that Iran-backed Houthi fighters are extending gains in Yemen to control the Red Sea, damping risk sentiment, although bitcoin remains above the key $85,000 level. Bitcoin falls 1.7% to $85,475 after rising to as high as $87,315 Monday, according to LSEG. "The move above $85,000 places attention on continued ETF inflows, corporate purchases, regulatory implementation and whether broader technology-market optimism survives higher interest rates," Zaye Capital Markets analyst Naeem Aslam says in a note. (renae.dyer@wsj.com)

0717 GMT - The increase in U.K. government borrowing is likely to put pressure on the treasury ahead of the Oct. 28 budget, Pantheon Macroeconomics' Rob Wood and Elliott Jordan-Doak say in a note. The latest U.K. public sector finances data show borrowing was 18.3 billion pounds in August, around 20% higher than in the same period in 2025. Higher government spending contributed to the rise, the data shows. (miriam.mukuru@wsj.com)

0712 GMT - Eurozone government bond yields open higher, tracking U.S. Treasury yield moves, alongside a rise in oil prices. That said, yields remain below recent multiyear highs amid the prospect of diplomatic progress between the U.S. and Iran after U.S. President Trump signaled readiness to meet his Iranian counterpart Masoud Pezeshkian at the UN meeting. The 10-year German Bund yield rises 3.1 basis points to 3.479%, the 10-year Italian BTP yield is up 4.6 basis points at 4.372%, and the 10-year French OAT yield rises 4.8 basis points to 4.507%, according to Tradeweb. (emese.bartha@wsj.com)

0704 GMT - U.K. public finances drifted further from the budget watchdog OBR's expectations in August, and spending overshoots will continue to boost borrowing in the coming years, Pantheon Macroeconomics economists Rob Wood and Elliott Jordan-Doak say in a note. Net borrowing at 18.3 billion pounds was considerably more than the OBR's 14.8 billion-pound forecast for August. The news will increase the pressure on Treasury chief John Healey as the prospect of a sharp drop in the government's buffer against its own fiscal rules beckons next month, the economists say. "The government will also face significantly higher spending pressures if it tries to meet its well-flagged priorities of boosting investment in housing, reforming social care, and increasing defense spending," they add.(edward.frankl@wsj.com)

0647 GMT - U.K. public finance data for August paints a dismal picture, narrowing the ambitions for Britain's new government, Capital Economics' Ruth Gregory says in a note. The 18.3 billion pounds of public borrowing in August exceeded the OBR budget watchdog's forecast, mainly due to higher government spending rather than softer receipts. That puts borrowing 8.1 billion pounds above the OBR's forecast in March. "And we expect this overshoot to persist as real GDP growth weakens in the fourth quarter and the government announces further cost-of-living support," Gregory says. That supports the view that many of the government's policy ambitions could be reined in or delayed at next month's budget announcement to avoid big tax hikes or a backlash in the markets, she adds. (edward.frankl@wsj.com)

0637 GMT - The dollar trades steady but remains near recent seven-week highs, lifted by the prospect of the Federal Reserve raising interest rates further. Chicago Fed president Austan Goolsbee said Monday that another 25 basis points rate rise likely wouldn't be enough if inflation was being driven by more enduring factors than higher energy prices. St. Louis Fed president Alberto Musalem said further rate increases were needed to rein back inflation. The comments come after the Fed lifted rates by 25 basis points last week and penciled in at least one more hike this year. The DXY dollar index trades flat at 100.457, having risen to as high as 100.564 on Friday.(renae.dyer@wsj.com)

0626 GMT - U.S. Treasury yields open higher in European trade after a pause in trading in Asian hours as the Tokyo market is closed. The driver is an increase in oil prices, even as investors look out for some diplomatic progress between the U.S. and Iran with the possibility of a meeting between the presidents of both countries at the UN meeting. Regarding a Trump-Xi summit, "for markets, the big question is what's going to happen when the current one-year trade truce expires in November, and whilst the general tone remains positive, there still isn't an agreement yet," Deutsche Bank strategists say in a note. The 10-year Treasury yield rises 1.9 bps to 4.981%, according to Tradeweb. (emese.bartha@wsj.com)

0619 GMT - The Federal Reserve is expected to raise rates once more in December, BNY's John Velis says in a note. BNY is less sure whether the Fed can proceed with as many interest-rate hikes in 2027 as the market has priced in, the Americas macro strategist says. "The answer hinges on how effective tighter policy can be given the current inflation shock," he says. Much revolves around the situation in the Middle East, where visibility is low, he says. "A pullback in tensions--and the lower oil prices that would follow--would likely change the markets' and the Fed's calculations," Velis says. But being beholden to a situation that could worsen before it improves isn't a tenable stance, he adds. (emese.bartha@wsj.com)

0613 GMT - Long-end government bond yields face challenges to move significantly lower given budget deficit issues, says Jefferies' Mohit Kumar in a note. "Even if oil prices move lower, we do not think that long end rates could rally significantly," the global economist says. The deficit picture, particularly in Europe, is concerning, especially considering the upcoming budget discussions in the fourth quarter and elections in various countries next year, he says. "With central banks not delivering on forwards (our view) and deficits still a concern, macro fundamentals would argue for a steeper curve," Kumar says. (emese.bartha@wsj.com)

0601 GMT - Germany and Italy line up for government bond sales on Tuesday, with the former conducting an auction and the latter launching a new green bond via syndication. The German Finance Agency will auction 5 billion euros in October 2031-dated federal notes, known as Bobl, while Italy will syndicate a new October 2038-dated green BTP. Rates strategists at Commerzbank estimate the issue size of the new BTP at 6 billion euros. (emese.bartha@wsj.com)

0556 GMT - Malaysia's Budget 2027 could be mildly positive for equities, balancing fiscal consolidation with targeted support for households, businesses and investment, CIMB Securities analyst Ivy Ng Lee Fang says in a note. The fiscal deficit could narrow to 3.4% of GDP in 2027 from 3.5% in 2026, while development spending is expected at 83 billion ringgit, she reckons. The budget could have a more sector and stock-specific impact rather than trigger a broad market re-rating, she says. Higher cash aid, tax relief for middle-income households and possible sales-tax relief could support consumption and margins. Consumer and construction stocks may benefit, while higher minimum wages, carbon and electric-vehicle levies could create sector-specific headwinds, she adds. (yingxian.wong@wsj.com)

0550 GMT - Global bond markets are likely to focus on the prospect of diplomatic progress between the U.S. and Iran at the U.N. meeting in New York with President Trump's speech on the agenda. Trump has signaled readiness to meet Iranian President Masoud Pezeshkian. The recent fall in oil prices helped bond yields decline. Brent is higher on Tuesday and was last up 1.4% at $101.75 per barrel. On Monday, the 10-year U.S. Treasury yield closed at 4.949%, while the 10-year German Bund yield ended at 3.455%, according to LSEG. (emese.bartha@wsj.com)