The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0325 GMT - The markets are caught between U.S.-Iran deal hopes and long weekend risks, OCBC Group Research's Christopher Wong says in a research report. "Softer oil and a modest pullback in UST yields helped ease the defensive tone, but investors remain wary of overpricing U.S.-Iran deal optimism before there is confirmation," the foreign-exchange strategist says. With the U.S. and the U.K. both having holidays on Monday, there is also "less appetite to add risk aggressively into the long weekend," Wong says. "The near-term setup is therefore less about a decisive directional break and more about positioning risk around the next headline." (ronnie.harui@wsj.com)
0311 GMT - The supply shock caused by Middle East tensions could start appearing in Japan's consumer prices as early as June, says Daiwa Securities economist Kento Minami. The impact of the geopolitical risk hasn't yet materialized in April's data, thanks partly to government energy subsidies. Consumer inflation, excluding volatile fresh food prices, rose 1.4% in April from a year earlier, slower than March's 1.8% increase. While Japan is making progress in finding alternative oil sources, an increase in costs due to longer shipping distances is unavoidable and is expected to act as a price-push factor going forward, Minami says. Worries over supply constraints are likely to persist, driven by oil quality variations and logistics bottlenecks, he adds.(megumi.fujikawa@wsj.com)
0251 GMT - Japan's food price growth, which has decelerated since last year, will likely pick up pace around the summer, says NLI Research Institute economist Taro Saito. Japanese companies have become more proactive in raising prices recently, as businesses and households have experienced sustained inflation since 2022, he says. "The upstream-to-downstream pass-through of price increases triggered by surging crude oil costs is likely to exceed past episodes in both magnitude and speed," he says. Japan's consumer prices excluding fresh food are expected to rise above 2.0% during the summer from April's 1.4% increase, he adds.(megumi.fujikawa@wsj.com)
0243 GMT - The Singapore dollar weakens slightly against its U.S. counterpart amid uncertainty over U.S.-Iran talks. Initial optimism over the negotiations has been tempered by Iran's insistence on keeping its enriched uranium stockpile, analysts of CIMB's Treasury and Markets Research say in a note. Also, "reports of Iran pursuing a toll framework to formalize control over the Strait of Hormuz added further geopolitical uncertainty," the analysts say. The U.S. dollar is 0.1% higher at 1.2787 Singapore dollars, FactSet data show. (ronnie.harui@wsj.com)
0241 GMT - A surge in oil prices triggered by the Middle East conflict is likely to start pushing up prices in Japan for a wide range of items with a time lag, says Mizuho Securities economist Ryosuke Katagi. Japan's consumer prices excluding fresh food and energy are expected to re-accelerate in the second half of 2026 and reach the upper 2% range between spring and autumn 2027, he adds. The gauge of underlying inflation increased 1.9% in April from a year earlier, falling below the Bank of Japan's 2% target for the first time since July 2024.(megumi.fujikawa@wsj.com)
0227 GMT - Japan's inflation slowed unexpectedly last month, but the central bank is still likely to raise rates in June, ING's Min Joo Kang says. April's cooldown was mainly due to government measures like energy subsidies, plus lower food prices after last year's high base, the economist writes. While the weaker CPI reading may complicate the Bank of Japan's decision next month, ING points out that policymakers focus on inflation excluding institutional factors, with core prices projected to remain above 2%. Pipeline prices--including producer and import prices--have also risen meaningfully over the past two months, which should show up in consumer inflation in the coming months. Stronger-than-expected 1Q GDP data and firm April exports signal economic resilience despite the energy shock, backing the case for an increase. (fabiana.negrinochoa@wsj.com)
0224 GMT - Japan's inflation could rise back above 2% during the summer and potentially accelerate toward nearly 3% by the end of the year if the Middle East tensions persist, says Norinchukin Research Institute economist Takeshi Minami. "A prolonged closure of the Strait of Hormuz could intensify oil price increases and procurement difficulties, potentially triggering a broad range of adverse effects, including price hikes for petroleum-derived products such as plastics, rising food production costs driven by fertilizer shortages, and increased logistics costs," he says. Consumer prices excluding fresh food climbed 1.4% in April from a year earlier, marking the slowest rise since March 2022, Friday's data showed. (megumi.fujikawa@wsj.com)
0219 GMT - The Reserve Bank of New Zealand is likely to keep interest rates on hold at a policy meeting next week, says Anthony Malouf, economist at Ebury. While inflation has surprised to the upside recently mostly due to rising energy prices, domestic demand has been softening in response to the rise in uncertainty stemming from the Iran War, he adds. The most likely path is to keep rates on hold for now, and use the policy meeting to provide abetter indication of where they see the economy ahead, he says. Still, Malouf expects two rate hikes later this year, followed by another hike early next year bringing the official cash rate to 3%. (james.glynn@wsj.com; @JamesGlynnWSJ)
0209 GMT - The Bank of Korea is expected to stand pat at next week's policy meeting but signal a rate increase down the road, Barclays's Bum Ki Son says. The economist expects the central bank to keep its policy rate unchanged at the May 28 meeting, though at least one dissenting board member is likely to vote for a hike. The seven-member BOK policy board at its previous rate-setting meeting in April unanimously decided to stand pat. "Risks are skewed towards a more hawkish meeting outcome," Son says. The board could be evenly split 3-3, requiring a casting vote from new BOK Gov. Shin Hyun-song, the analyst adds. (kwanwoo.jun@wsj.com)
0119 GMT - Asian currencies consolidate against the dollar in the morning session, but may be weighed by higher Treasury yields that typically enhance the appeal of dollar-denominated fixed-income assets. "Elevated U.S. yields and hawkish Fed repricing are likely to continue weighing on regional FX in the near term," MUFG Bank's Lloyd Chan says in a research report. Although Brent crude oil prices have declined, they remain above $100 per barrel, "keeping pressure on oil import bills and sustaining inflation risks" in Asia, the senior currency analyst says. The U.S. dollar edges 0.1% higher to 159.10 yen, but is 0.1% lower at 31.510 Taiwan dollars, LSEG data show. (ronnie.harui@wsj.com)
0055 GMT - The easing of Japan's inflationary pressures is unlikely to persist, Capital Economics' Abhijit Surya says in commentary. Data released earlier showed Japan's consumer prices excluding fresh food rose 1.4% on year in April, slowing from March's 1.8% rise. However, based on Thursday's flash manufacturing PMI data, Japanese companies' output prices are rising quickly and they point to a strong pickup in core goods inflation in coming months, the senior APAC economist says. Also, "with wages growing at a strong clip, we don't think the recent weakness in services inflation is likely to last," Surya says. "We still think [the BOJ] will tighten policy further in the months ahead," the economist adds. (ronnie.harui@wsj.com)
0039 GMT - JGBs edge lower in price terms in the early Tokyo session as investors weigh Middle East developments. There seem to be "conflicting signals on U.S.-Iran peace negotiations," UOB's Global Economics & Markets Research team says in a research report. U.S. Secretary of State Rubio said there were "some good signs" that a deal with Iran could be reached, the team says, citing a media report. However, Iranian President Masoud Pezeshkian said "we will never back down" in talks, the team notes. The five-year JGB yield is up 0.5 bps at 2.010%; the 10-year yield is 0.5 bp higher at 2.765%.(ronnie.harui@wsj.com)
(END) Dow Jones Newswires
May 21, 2026 23:25 ET (03:25 GMT)
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