The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0819 GMT - Thailand's stronger-than-expected 1Q GDP growth could be short-lived and not sustainable, CGS International economist Gun Hathaisattha says in a note. The latest data likely didn't fully reflect the effects of the Middle East war and crude oil prices hitting $100 per barrel. The real impact would be seen in 2Q and 2H, when CGS International projects crude oil prices to average at $80 a barrel in 2026 and to be $100 from March to August before potentially falling below $100 in 4Q. "This will impact the Thai economy across the board, from souring consumption sentiment to increasing fuel imports," the economist says.(amanda.lee@wsj.com)
0806 GMT - The coming couple of weeks could be a sweet spot for a deal in the U.S.-Iran conflict, Jefferies' Mohit Kumar says in a note. "We are optimistic," the global economist says. Higher oil prices are hurting the U.S. consumer, while the blockade has dried up the oil revenue for Iran, he says. Both sides want the current stalemate to end, but in a manner that either side can claim victory, Kumar says. With the Trump-Xi summit out of the way, "a path has opened for some version of an agreement," Kumar says. (emese.bartha@wsj.com)
0755 GMT - A potential golden window for the internationalization of the Chinese yuan may be emerging, Citi analysts say in a note, pointing to geopolitical shifts and rising global yuan payments. Yuan settlement in goods and commodity trade has risen sharply, accelerating amid the conflict in the Middle East, with Iran and the United Arab Emirates signaling openness to yuan transactions. Wider use of the 'petroyuan' may further accelerate this trend, as China is a dominant crude buyer. Greater yuan-denominated oil proceeds would boost Chinese goods exports and investment in yuan assets, such as offshore bonds. Still, long-standing constraints on yuan use remain, including restrictions on capital convertibility and financial market access. Citi says a meaningful milestone would be if foreign holdings of onshore yuan assets return to 2021 peak levels. (jason.chau@wsj.com)
0754 GMT - The Bank of Thailand is likely to remain on an extended pause amid stagflation concerns, says DBS senior economist Chua Han Teng in a report. Growth faces headwinds from the war in the Middle East, including potentially weaker private consumption and tourism disruption. Inflation surged in April, driven by a jump in fuel prices. Higher inflation will dent household spending amid weaker consumer confidence, Chua says. The BOT is also unlikely to address the supply-side inflation shock with rate increases in the near term, as tighter policy would weigh on growth.(amanda.lee@wsj.com)
0748 GMT - U.K. government bonds, or gilts, are expected to face high volatility in the coming months due to political uncertainty, IBOSS chief economist Rupert Thompson says in a note. "Keir Starmer now looks pretty unlikely to remain as prime minister, which will probably entail some shift to the left in government policy," he says. Lack of clarity around the future leader of the U.K. could spark gilt-market volatility, Thompson says. Ten-year gilt yields fall 7.3 basis points to last trade at 5.066%, having surged to 5.190% on Monday, their highest level since 2008, Tradeweb data show. (miriam.mukuru@wsj.com)
0741 GMT - Weaker-than-expected labor market data in the U.K. is likely to reinforce a cautious stance by the Bank of England, ING's James Smith says in a note. The unemployment rate rose to 5.0% in the three months to March, with payrolls tumbling and wage growth slowing. "Weakness has been particularly concentrated in consumer-facing sectors most affected by last year's tax and minimum wage hikes. That pressure is only likely to be exacerbated by the incoming energy shock," he says. In this context, the economy looks less susceptible to second-round inflationary effects from higher energy prices, brining rate hikes by the BOE into question, Smith says. "We're still forecasting a rate hike in June, but that is far from guaranteed." (don.forbes@wsj.com)
0727 GMT - Yields on U.K. government bonds fall after weak U.K. labor market data reduce the chances of the Bank of England increasing interest rates in the coming months. U.K. average wage growth, excluding bonuses, slowed to 3.4% in the three months to March, from 3.6% in the three months to February. "Absent a further surge in oil prices, it is hard to see interest rates being increased much if at all in this environment," Aberdeen's Luke Bartholomew says in a note. Ten-year gilt yields fall 7 basis points to 5.069%, Tradeweb data show. (miriam.mukuru@wsj.com)
0713 GMT - Japan equities could continue to outperform their peers even with moderate yen weakness, says T. Rowe Price's Daniel Hurley in a note. A gradually weaker yen still supports earnings for exporters and multinational companies, which could boost equities overall, Hurley says. However, an uncontrolled currency decline could turn into a headwind as Japan is also dealing with imported inflation and rising input costs, driving worries about policy tightening, household purchasing power and financial stability. "The healthiest and best outcome for Japan equities would be a gradual appreciation of the yen as the Bank of Japan normalizes monetary policy," the portfolio specialist says. The biggest near-term risk would be a sharper-than-expected appreciation in the yen driven by the central bank or external political pressure on currency policy, he adds. (megan.cheah@wsj.com)
0713 GMT - Eurozone government bond yields edge lower in early trade as global bond markets stabilize after Monday's selloff. This comes after U.S. President Trump said he will put off a strike on Iran Tuesday, raising hopes of de-escalation and the potential for progress on peace talks. Government bond supply will be modest from the eurozone, with Germany selling 5 billion euros in April 2031 Bobl and Finland auctioning up to 1.5 billion euros in April 2030- and April 2041-dated bonds. The 10-year German Bund yield falls 1 basis point to 3.150%, according to Tradeweb, having hit a 15-year high of 3.193% on Monday. (emese.bartha@wsj.com)
0703 GMT - Sterling falls after data showed higher U.K. unemployment and slower wage growth, which analysts say could dissuade Bank of England policymakers from raising interest rates for now. The U.K.'s unemployment rate picked up in the three months through March to 5.0% compared with 4.9% in the three months through February, the data showed. Annual wage growth, excluding bonuses, fell to 3.4%, from 3.6% in the previous period. In addition, an early estimate of payrolled employees dropped by 100,000 on month in April, the largest fall since the pandemic. Sterling falls 0.25% to $1.3400, from around $1.3415 before the data. The euro rises 0.1% to 0.8682 pounds. (jessica.fleetham@wsj.com)
0647 GMT - The Bank of Japan is likely to raise its policy rate to 1.0% in July from the current 0.75% and lift it again in December and sometime in 2027, says Harumi Taguchi of S&P Global Market Intelligence. That would bring the policy rate to 1.5%. The BOJ could raise rates further if higher oil prices and a weak yen fuel concerns about second-round effects of inflation, the economist says. Given sustained high oil prices that increase dollar demand, mounting expectations for Federal Reserve rate hikes and fears of fiscal expansion in Japan, the yen is unlikely to recover in the near term, Taguchi adds. The dollar was last trading at Y159.03, back near levels that could trigger intervention.(megumi.fujikawa@wsj.com)
0646 GMT - Malaysia's central bank might raise the policy rate by 25 bps to 3.0% in September, as inflation pressures remain contained, Barclays economist Brian Tan says in a note. He thinks Bank Negara Malaysia has been cautious about tightening policy due to concerns that the Middle East conflict could hurt economic growth. Still, Tan expects those downside risks to remain manageable, paving the way for BNM to reverse last year's rate cut to contain broader inflation pressures. Barclays raises its Malaysia 2026 inflation forecast slightly to 2.3% from 2.2%, due to higher unsubsidized fuel prices and expected increases in subsidized RON95 fuel prices. (yingxian.wong@wsj.com)
(END) Dow Jones Newswires
May 19, 2026 04:19 ET (08:19 GMT)
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