The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1309 ET - The European Central Bank's decision to hold the interest rate at 2% makes perfect sense given the current uncertainty in markets, Morningstar strategist Michael Field said. Interest rate has been stable until a few months ago, but after the price of a barrel of oil spiked to $125, the situation has become more volatile. "The Governing Council will closely monitor the situation and follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance," writes the European Central Bank in a press release. Investors have priced in 2-3 rate hikes as high as 2.5%-2.75%. Field says markets presumably will read the language in today's statement positively.(julia.nasser@wsj.com)
1257 ET - Kevin Warsh faces serious headwinds as new Fed Chair, as energy inflation spreads across the economy and the FOMC leans hawkish. "Warsh will be inheriting a committee…that is notably less dovish than where it was three to six months ago," Mackenzie Investments' Dustin Reid says. Warsh is presumed to be willing to cut interest rates, but he would need to convince FOMC members, something that became notably harder after three members voted to remove a dovish indication from the committee's statement. "Will he be able to find consensus and get people to his view, if that indeed is his view, once he does take over as Chair?" Reid says. (paulo.trevisani@wsj.com; @ptrevisani)
1254 ET - Higher energy prices are already spreading in the U.S. economy and core PCE inflation is likely to reach 3.5% or higher in coming months, Mackenzie Investments' Dustin Reid predicts. The gauge was 3.2% in March. "We do see higher prices across most of the consumer's purchase basket." Reid fears that, even if the conflict in the Middle East ends soon, energy would remain costly, keeping inflation hot and hard to control. A slight 1Q increase in the employment cost index to 0.9% from 0.7% supports his view. Reid says it is possible the Fed could cut rates once this year. Markets are mostly pricing a longer hold. (paulo.trevisani@wsj.com)
1244 ET - Inflation-protected bonds are the best bet for fixed-income investors as the Iran war spurs consumer price increases across the globe, Mackenzie Investments' Dustin Reid says. "The risks around inflation are going to continue to be significant here over the coming months." Reid says markets are yet to price in that inflation risk, meaning that inflation-protected bonds are relatively cheap, particularly in the front end. The yield on the five-year inflation-linked Treasurys, or TIPS, was 1.38% yesterday, little changed from 1.11% before the conflict. Buying "anything that is inflation protected globally makes sense," particularly in Europe, he says. (paulo.trevisani@wsj.com; @ptrevisani)
1223 ET - Fixed-income traders ignored some crucial bits from the Bank of Canada's communications that should have dampened their belief about pending interest-rate increases later this year, says economist David Rosenberg, head of Rosenberg Research. He says bond bears capitalized on Gov. Tiff Macklem's reference to possible policy tightening in response to elevated energy prices. "That was a conditional comment," Rosenberg says, adding they missed Macklem's reference to possible rate cuts in the event of a breakdown in U.S.-Canada trade talks. He adds the BOC forecast indicated it believes excess capacity in 2027 and 2028 will limit price increases, keeping inflation close to the 2% target. "I doubt the BOC is going to be hiking in advance of a full closing in the output gap. (paul.vieira@wsj.com; @paulvieira)
1140 ET - The trimmed mean PCE inflation rate--a measure calculated by the Dallas Fed--was 2.4% over the 12 months ending in March, lower than the 3.2% core 12-month PCE inflation rate released by the BEA. At Kevin Warsh's confirmation hearing, he discussed a preference for trimmed-mean and median inflation over core PCE measures. As the war in Iran threatens to keep prices elevated, some members of the Fed have pivoted to a more hawkish stance. Unlike core PCE, which excludes food and energy, the trimmed measure excludes the most extreme price changes--both increases and declines. (jessica.coacci@wsj.com)
1113 ET - The European Commission should maintain high merger-control standards, consumer group BEUC's Alexandre Biard says after the EU executive announced plans to overhaul how it looks at companies' multibillion-euro transactions and start weighing potential benefits deals could bring to innovation in the bloc. "The EU does not need to make a binary choice between competition and global competitiveness," adds Biard, head of competition and enforcement at BEUC. "EU champions should be created through competition based on merits and the removal of barriers within the single market, not by loosening merger control rules," Biard says. (edith.hancock@wsj.com)
1109 ET - While the European Central Bank's decision to hold its key rate was expected, the following press conference was far more interesting, Berenberg's Felix Schmidt says in a note. ECB President Christine Lagarde acknowledged that policymakers had discussed the possibility of a rate hike as a serious option today. "This gave the meeting a hawkish tone," Schmidt says. The bank will closely monitor the situation surrounding the Iran war until its next meeting on June 11. However, mounting domestic political pressure should prompt President Trump to de-escalate the conflict, allowing the ECB to look through the temporary, supply-driven spike in inflation, he says. However, the likelihood of the Strait of Hormuz being closed throughout May and the ECB responding with a rate hike is increasing, he notes. (edward.frankl@wsj.com)
1050 ET - U.S. pending home sales rose 2.7% year-over-year during the four weeks ending April 26, Redfin says. That's the biggest increase in six weeks. Redfin says affordability is improving. The weekly average mortgage rate has dropped to 6.23% from a seven-month high of 6.46% at the start of April, pushing the median monthly housing payment down 2.2% year-over-year. Markets have also started to stabilize. Sellers are coming out of the woodwork as they notice demand from buyers creeping up. New listings rose 2.2% year-over-year, the second week of increases after five straight months of declines. Spring is also prime home-selling season, when homes are more likely to sell above their asking price, and to sell faster. (chris.wack@wsj.com)
1041 ET - European Central Bank President Christine Lagarde's comments at the press conference suggest that a June hike has come closer, stressing the intensified risks for both growth and inflation, ING's Carsten Brzeski says in a note. Indeed, the most notable comments were Lagarde's mention of a rate-hike debate at the meeting, even though the decision to keep rates on hold was unanimous, he says. However, the motivation or justification for such a rate hike was not entirely clear. The ECB has previously underestimated the adverse impact of a shock and focused too much on rising inflation, such as in 2011 amid the sovereign-debt crisis, Brzeski says. Nevertheless, the ECB introduced a clear hiking bias to its wait-and-see stance, he says. (edward.frankl@wsj.com)
1021 ET - Rising oil prices, higher U.K. government bond yields, the prospect of weaker U.K. economic growth and upcoming U.K. local elections pose risks to sterling's outlook against the dollar, HSBC's Nick Andrews says in a note. Oil prices are a key driver of the exchange rate as long as the Middle East conflict persists, he says. Meanwhile, higher debt interest costs could bring the U.K.'s structural vulnerabilities back into focus, he says. If the economy weakens it could hold back the Bank of England from raising rates despite higher inflation, he says. Finally, the May 7 elections could weigh on sterling if it leads to a leadership challenge for Prime Minister Keir Starmer. Sterling rises 0.3% to $1.3513. (renae.dyer@wsj.com)
1011 ET - The Bank of England has bought itself time at its latest meeting, Deutsche Bank's Sanjay Raja says in a note. The "active hold," in Governor Andrew Bailey's words, kicks the can of a rate hike down the road at least to July, Raja says. But the longer the energy shock lasts, the higher the likelihood of rate hikes. Policymakers' divisions stretch far beyond the 8-1 vote tally. "The more the bank staff's short-term projections are tested, the harder it will be for some on the committee to remain on the sidelines," he says. Given high geopolitical uncertainty, multiple rate hikes can no longer be discounted, Raja says. (edward.frankl@wsj.com)
(END) Dow Jones Newswires
April 30, 2026 13:09 ET (17:09 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments