The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0944 ET - Canada's 1Q GDP drop was partly fueled by a fifth straight quarter of a decline in business investment -- a reflection of how the dark cloud of U.S. tariff policy has a stranglehold on the country's economy. Drops in both business and government spending offset a rise in inventories and a 1.5% annualized jump in household spending. CIBC Capital Markets notes that the household savings rate dropped further in 1Q to 3.5%, or the lowest level in two years. "That doesn't bode well for consumption in 2Q," says Katherine Judge, a CIBC economist. (paul.vieira@wsj.com; @paulvieira)
0930 ET - Canada's shock 1Q drop in GDP marks the second straight quarter of declining output -- and that is likely to spur recession talk, as two straight quarters of declining output is the viewed as the technical definition of a recession. In the U.S., the National Bureau of Economic Research makes an official declaration on recessions. The closest thing to an NBER-like body in Canada is the CD Howe think tank's Business Cycle Council. It defines a recession as a "pronounced, persistent, and pervasive decline in aggregate economic activity." Canada's 1Q drop was a relatively muted 0.1% annualized decline, following a 1% drop in 4Q, and Statistics Canada estimates that GDP rose 0.4% in April. (paul.vieira@wsj.com; @paulvieira)
0921 ET - The Japanese yen could remain weak in the near term despite recent interventions to bolster the currency, ING's Chris Turner says in a note. The Ministry of Finance said Friday that Japan spent 11.7349 trillion yen, or $73.69 billion, on interventions between April 28 and May 27. However, the yen only briefly recovered before turning weaker again. Unless the Bank of Japan can drive real interest rates adjusted for inflation higher, the yen will struggle to recover, Turner says. "Until then, we expect [dollar versus the yen] to stay bid near 160 yen over coming months and possibly push into the 162-163 area." The dollar trades steady at 159.27 yen. (renae.dyer@wsj.com)
0920 ET - There's no evidence in Germany of passthrough from the energy-price shock into more underlying indicators of inflation, Commerzbank's Ralph Solveen says in a note. Headline inflation declined to 2.6% in May from 2.9% in April, due to a temporary cut in energy taxes and food prices that cooled more sharply than typical of this time of year, he says. While there was a rise in core inflation--to 2.5% from 2.3%--that can be explained solely by package tours, due to a one-off effect in April, he says. Though there currently lacks evidence of an additional boost to inflation from higher energy prices, this will likely change unless the conflict in the Middle East eases significantly and energy prices continue to fall, Solveen says. (edward.frankl@wsj.com)
0918 ET - The decline in German inflation this month is mainly attributable to a cut to fuel duties, without which the level would be about 0.2 to 0.3 percentage points higher, says KfW chief economist Dirk Schumacher in a note. Headline inflation was 2.6%, down from 2.9% in April. Price pressures in the services sector nevertheless remain uncomfortably high for the European Central Bank, and will remain so even if the Strait of Hormuz reopens soon, he says. The ECB will likely raise its key rate by a quarter-point at June's meeting, though this might be more a symbol of its readiness to act rather than reflecting genuine concern about inflation, he says. (edward.frankl@wsj.com)
0913 ET - Canada's economy looks to be in softer shape than anticipated, having now contracted in three of the last five quarters. The downturn in activity in the first quarter was mild, with GDP slipping 0.1% annualized against economist expectations of 1.5% growth. The contraction for the prior quarter was revised up to 1% from 0.6% previously, and growth in the third quarter of 2025 was revised lower to 1.9% from 2.4%. On a monthly basis, industry-level GDP dipped 0.1% on-month in March after a 0.2% rise in February and there was no change in January where it was previously estimated to have edged up 0.1%. On a more optimistic note, GDP in April is estimated to have grown 0.4%, the strongest since last July. (robb.stewart@wsj.com; @RobbMStewart)
0902 ET - Treasury yields are on path for a sharp monthly decline amid hopes the U.S. and Iran could be near a deal to reopen the Strait of Hormuz. Oil futures fall, with the WTI below $90 a barrel. The WSJ Dollar Index gives up overnight gains and is flat. Markets turn their focus to jobs data due next week, including the last payrolls before the Fed's June 17 meeting. The 10-year is at 4.447%, down from 4.454% yesterday. The two-year slips to 4.021% from 4.024. (paulo.trevisani@wsj.com; @ptrevisani)
0850 ET - Canada's economy unexpectedly contracted in the first quarter, notching the first back-to-back quarterly declines in gross domestic product since the oil shock in early 2015 outside of the early years of the pandemic. GDP dipped 0.1% in annualized terms after declining a revised 1% in 4Q 2025. That contrasts with the recovery that was expected, with economists and the Bank of Canada penciling in growth of 1.5% for the quarter. Higher goods imports, particularly of gold, were largely offset by a build up of business inventories. And falls in business and government capital investment were balanced by increased household spending. Final domestic demand edged 0.1% lower after rising 0.7% the quarter before. (robb.stewart@wsj.com; @RobbMStewart)
0839 ET - The Swedish economy moved sideways in the first quarter of the year, though there are no clear signs of an impact from the Middle East conflict, DNB Carnegie's Sweden chief economist Ulf Andersson writes. The tentative start to 2026 partly reflects higher defense-related spending in the fourth quarter of 2025, he says. Retail sales for April were also published, showing unchanged sales on month and 4.7% growth on year. Thursday's economic tendency indicator for May showed sentiment remained broadly neutral. "This week's data provide little evidence so far of any material impact from the conflict in the Middle East." DNB Carnegie expects the Riksbank policy rate to remain unchanged in June, followed by a rate hike in November. (dominic.chopping@wsj.com)
0824 ET - The current credit environment is favourable for investors seeking yield and enhanced income potential, J.P. Morgan Asset Management's Andreas Michalitsianos says in a note. "Corporate fundamentals remain solid and resilient, while mega-trends in technology, the global dominance of U.S. energy and increased investment in defense are all contributing to strong forward earnings," the head of global credit says. Even lagging sectors, such as autos, are stabilising, he says. Although credit spreads remain close to all-time tight levels, credit markets should stay supported by a strong profitability outlook, low default rates and robust demand from investors. These factors offset uncertainties caused by U.S. tariffs and the Iran conflict, he says. (emese.bartha@wsj.com)
0745 ET - Japan's recent currency interventions to shore up the yen appear the least successful, MUFG Bank's Derek Halpenny says in a note. The Ministry of Finance said Friday that Japan spent a record 11.7349 trillion yen, or $73.69 billion, on interventions between April 28 and May 27. However, the yen only recovered briefly as the dollar versus the yen has since returned close to levels seen before the interventions. A potential Middle East deal would play a bigger role in driving the dollar lower versus the yen if global yields fall on reduced inflation fears, Halpenny says. The dollar last trades at 159.26 yen. It reached a low of 155.02 on May 6 after the latest interventions before turning higher, LSEG data show. (renae.dyer@wsj.com)
0658 ET - Evidence of weakening risk sentiment are apparent in bitcoin and ethereum amid continued geopolitical uncertainty and a more divided Federal Reserve, analysts at crypto firm Block Scholes say in a note. Block Scholes' risk appetite index for both assets is no longer at a level that suggests more upward momentum, they say. There is also waning demand for spot bitcoin and ethereum exchange traded funds with outflows in recent days, they say. Bitcoin rises 0.1% to $73,575 after reaching a six-week low of $72,502 Thursday, LSEG data show. Ether drops 0.1% to $2,009 after hitting a two-month low of $1,967 Thursday. (renae.dyer@wsj.com)
(END) Dow Jones Newswires
May 29, 2026 09:44 ET (13:44 GMT)
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