1040 ET - The dollar could advance further over the short term as high energy prices make U.S. interest-rate cuts look increasingly unlikely while rate-hike prospects grow, MUFG analysts say in a note. Federal Reserve minutes Wednesday "will likely reveal a growing opposition to rate cuts." Additionally, with Kevin Warsh due to take over the role as Fed Chair, his first public comments will be crucial, they say. U.S. money markets currently price a 71% chance of a rate hike in January 2027, LSEG data show. Any hint that Warsh is concerned about inflation risks could increase rate-hike expectations and lift the dollar, the analysts say. The DXY dollar index falls 0.2% to 99.083, having risen to a near six-week high of 99.409 overnight. (jessica.fleetham@wsj.com)

1036 ET - The idea of new Federal Reserve chairman Kevin Warsh ushering in a regime of interest rate cuts has faded, which is one reason bitcoin and other cryptocurrencies are down. Bitcoin is off 2% to $76,660, according to data from LSEG, bringing the value down to a near-term support level after rising as high as $82,000 last week. Trading below $78,000 for an extended period will be a test for bitcoin, one "that could determine whether the broader recovery structure remains intact," says Bitfinex in a note. Lower capital inflows into bitcoin ETFs are showing that institutional interest in bitcoin may not be as strong as hoped for, says the firm. The divergence suggests that "institutional conviction remains insufficient to absorb ongoing macroeconomic shocks and rate volatility," Bitfinex says. (kirk.maltais@wsj.com)

1019 ET - Providence, R.I., tops Zillow's hottest rental markets list, edging out New York and San Francisco for the No. 1 spot. For renters in these markets, competition is fierce. More people want to live there than there are homes to rent. Whether for access to amenities, strong job markets or family ties, renters are competing over a limited supply, according to Zillow. The U.S. built more new units in 2024 than any year in the past half-century, Zillow says, but that boom largely bypassed the Northeast and coastal California, which is why rental competition there is so intense. In Providence, rents are up 5% year-over- year, and with just 12.9% of property managers offering concessions--the lowest share in the top 10--renters are finding little room to negotiate. The typical rent is $2,154 a month. (chris.wack@wsj.com)

1015 ET - Corporate bonds that are rated single B or lower could struggle to perform in the coming months due to weak economic outlooks in the U.S. and eurozone, Societe Generale's Juan Valencia says in a note. "The economies aren't growing strongly enough for the weaker names to thrive," he says. (miriam.mukuru@wsj.com)

0941 ET - Last week, the Fed said it will slow down its monthly net Treasury bill purchases to $10 billion, from $40 billion earlier this year. For now, bank reserves, a key Fed liability, look to be sufficiently ample. But in the longer run, growing the balance sheet at $10 billion a month probably isn't enough to keep pace with the economy's growing needs, analysts at Wrightson say in a note. In any case, slowing net purchases any further would risk signalling the Fed is tilting toward a leaner reserves regime. New chair Kevin Warsh is unlikely to make balance-sheet waves early on, they predict: "Chair Warsh will want to build consensus within the FOMC, and will probably want to avoid the appearance of pre-empting the Committee before his first meeting." (matt.grossman@wsj.com; @mattgrossman)

0937 ET - Yields on U.K. government bonds, or gilts, fall after the International Monetary Fund indicated that the Bank of England does not have to raise interest rates as they are sufficiently restrictive. "Under the current energy price outlook, holding rates for the remainder of the year should be sufficient to bring inflation back to target by end-2027," the IMF said on its website. However, given the highly uncertain political and geopolitical environment, BOE rate decisions should remain data dependent, IMF said. Two-year gilt yields fall 6 basis points to last trade at 4.485%, having hit a one-week high of 4.573% in morning trade, Tradeweb data show. Ten-year gilt yields fall 6 basis points to 5.100%. (miriam.mukuru@wsj.com)

0923 ET - A sharp increase in Treasury yields this month may be close to a peak. "We no longer think risks are skewed toward higher yields," JPMorgan analysts write, arguing that "money markets are pricing in a more hawkish outcome than our base case and valuations have retraced." Markets are mostly pricing a prolonged Fed hold, with increasing odds of a hike, according to CME. Longer-term bonds look cheap. "We think this bearish repricing leaves opportunity to add duration." The 10-year Treasury yield is at 4.58% and the two-year at 4.06%, both off overnight highs. (paulo.trevisani@wsj.com; @ptrevisani)

0910 ET - Headwinds from Iran are meeting tailwinds from the AI boom, which is "not good weather for bonds," says Generali Investments' Vincent Chaigneau in a note. The recent selloff in bonds isn't just about oil, but inflation is multi-pronged, he says. "We see the AI boom as a positive supply shock that eventually may help contain inflation, but for now it creates a demand shock that is adding to it, not least via memory chip prices," the head of research says. This is compounding the effects of the Iran war, which is a negative supply shock causing energy, food and industrial inflation, he says. In the near term, government bond yields could fluctuate with oil prices, and any sign of Strait of Hormuz reopening would help, he says. (emese.bartha@wsj.com)

0906 ET - Yields on U.K. 10-year government bonds, or gilts, could stay around 5% as political volatility causes investors to demand premia on U.K. bonds, Oxford Economics Andrew Goodwin says in a note. It appears likely that Prime Minister Keir Starmer or his potential successor could raise fiscal spending in an attempt to gain popularity with voters, a move that could weaken U.K. public finances further, Goodwin says. Ten-year gilt yields decline 5.8 basis points to last trade at 5.106%, dropping back after hitting 5.190% in early trade, their highest level since 2008, Tradeweb data show. (miriam.mukuru@wsj.com)

0904 ET - Bond markets are steady as Wall Street worries about the global supply of oil amid no signs that tankers will soon resume normal traffic through the Strait of Hormuz. President Trump again threatens Iran with military action if Tehran doesn't agree to a peace deal. Oil prices slip, but remain at high levels, with WTI down 1% to $104. The WSJ Dollar Index declines 0.2%. The 10-year yield is at 4.587%, down from Friday's 4.595% settle. The two-year slips to 4.063% from 4.082%, both off overnight highs. (paulo.trevisani@wsj.com; @ptrevisani)

0833 ET - If U.K. data due this week show economic weakness, this could reduce the chances of the Bank of England raising interest rates in the coming months, ING's Benjamin Schroeder and Michiel Tukker say in a note. U.K. jobs data are due on Tuesday, U.K. inflation on Wednesday, and U.K. retail sales on Friday. Lower-than-expected wage growth and signs of economic slack "should make some BOE officials more relaxed about the risk of second-round effects from the current energy crisis", they say. Investors fully price in two quarter-point BOE rate rises by the end of 2026 and a 52% probability of a third one, LSEG data show. (miriam.mukuru@wsj.com)
source: https://www.tradingview.com/news/DJN_DN20260518005231:0/