The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1028 GMT - Currencies in South Korea, Japan and Taiwan are underperforming, contrasting with strong AI-driven equity gains in these markets, Vishnu Varathan of Mizuho Securities Singapore writes in a note. The dissonance is likely due to net foreign-equity outflows from Korea and Taiwan, and constrained current-account dynamics in Japan, he says. Political-fiscal risks are also taking precedence. Supply-side shocks from the U.S.-Iran conflict, particularly with the Strait of Hormuz blocked, are hurting the currencies given their economies' disproportionate energy reliance and risks of industrial input disruptions, he adds. While downward pressures on the currencies could easily reverse if Iran risks are alleviated, the significant uncertainty means the drag will be hard to avoid, he says. (kimberley.kao@wsj.com)
1027 GMT - Ether could rise further against bitcoin after Strategy sold bitcoin holdings for the first time since 2022, Standard Chartered's Geoff Kendrick says in a note. Strategy said Monday that it sold 32 bitcoin last week for about $2.5 million. "I see yesterday as being the start of ether outperformance versus bitcoin." While small, Strategy's selling highlights the different business models of bitcoin digital asset treasury $(DAT)$ companies compared to ether DATs, he says. Ether has a 3% staking yield so there is no need for ether DATs to sell the cryptocurrency, which is different to bitcoin DATs. Ether versus bitcoin rises to a near three-week high of 0.0284530, according to LSEG, and Standard Chartered expects it to reach 0.040 by year-end. (renae.dyer@wsj.com)
1024 GMT - Eurozone consumer-price growth in May was largely driven by a surprisingly sharp jump in core inflation, Vincent Stamer at Commerzbank says in a note. Inflation is likely to settle just above 3%, while the core rate could rise significantly in the second half, with surveys showing that companies intend to pass on costs to consumers, he says. Inflation rose to 3.2% in May, from 3.0% a month prior. Core inflation jumped to 2.5% from 2.2%. This is possibly an early sign of the indirect effects of high oil prices, Stamer says. "National data suggest that transportation prices, such as airline tickets, have become more expensive." The ECB will likely raise rates next week, and then once more in the third quarter, Stamer says. (don.forbes@wsj.com)
1016 GMT - Uncertainty is increasing, making it difficult to form a decisive, direction-setting position in duration, Amundi Investment Institute's Vincent Mortier and Monica Defend say in a note. Duration measures the sensitivity of bonds to changes in interest rates. "We have become somewhat cautious with U.S. duration, given that growth remains robust and fiscal risks persist," they say. In Europe, weaker growth and a cautious European Central Bank are making short- and medium-term bonds attractive, although Amundi remains cautious towards the long end. (emese.bartha@wsj.com)
1015 GMT - Eurozone inflation rising to 3.2% in May builds pressure on the European Central Bank to raise interest rates next week, Joe Nellis at MHA says in a note. "Underlying price pressures remain strong, with service inflation and wage growth persisting, businesses passing on costs, and global instability driving up energy and transport costs," he says. Prior to the war, markets had expected that the ECB would cut rates to support a sluggish economy. "The fact that even a small increase is causing concern about the eurozone's outlook says a great deal about the economy's underlying structural problems." The ECB is likely to hike next week, but the outlook beyond that is uncertain given the clouds hanging over businesses, households and governments, Nellis says. (don.forbes@wsj.com)
1014 GMT - Net new mortgage approvals in the U.K. climbed to 65,945 in April, from 63,979 in March, stronger the consensus forecast of 61,600 from economists in a WSJ poll. "Households have likely brought forward house purchases ahead of feared further mortgage rate rises," Pantheon's Rob Wood says in a note. Investors fully price in the possibility of one quarter-point interest-rate rise by the Bank of England in 2026 and a 60% probability of a second increase, LSEG data show. (miriam.mukuru@wsj.com)
1003 GMT - The rates market is likely to react more than equities to a ceasefire in the Middle East, Jefferies' Mohit Kumar says in a note. U.S. stocks have risen sharply recently and Jefferies' positioning indicators have suggested that long U.S. equity positions are "getting crowded," the global economist says. For bonds, markets have likely priced in too many rate increases and therefore have more scope to correct, Kumar says. "We see only one hike from the European Central Bank and none from the Federal Reserve or the Bank of England." Money markets price 61 basis points of rate hikes from the ECB this year, 39 basis points for the BOE and 16 basis points for the Fed, LSEG data show.(emese.bartha@wsj.com)
0942 GMT - Eurozone inflation data have recently delivered few major surprises, leaving developments in negotiations to end the Iran conflict more relevant for the euro, Commerzbank's Michael Pfister says in a note. Data earlier showed eurozone inflation accelerated in line with expectations in May. Inflation rose to 3.2% year-on-year in May from 3.0% in April, as forecast by economists in a WSJ survey. Despite the energy price shock, inflation data have been generally in line with expectations, Pfister says. The euro is last up 0.1% at $1.1644, little changed after the data. (renae.dyer@wsj.com)
0917 GMT - The euro continues to trade higher against the dollar after data showed eurozone inflation accelerated in line with expectations in May. Inflation rose to 3.2% year-on-year in May from 3.0% in April, as forecast by economists in a WSJ survey. Core inflation rose to 2.5% in May from 2.2% in April, slightly above the 2.4% expected. Ahead of the data, Commerzbank's Michael Pfister said the data were likely to have little impact on the euro given the absence of recent major surprises in previous prints. "As long as we do not see more pronounced surprises, the effect on interest rate expectations is likely to remain limited." The euro rises 0.1% to $1.1641, little changed from levels before the data.(renae.dyer@wsj.com)
0916 GMT - China's latest factory activity data suggests demand remains weak, according to BofA Securities in a research note. The May PMIs suggest growth remains supported by supply-side resilience while demand stays fragile, the economists say. "Manufacturing is holding up for now but gradually losing momentum," they say. Broader activity remains sensitive to weak demand and cost pressures, they note. Investors are closely watching the upcoming release of May activity data. Continued softness could make policymakers reassess conditions and recalibrate policy support, they say. (tracy.qu@wsj.com)
0915 GMT - Money and lending data in April show U.K. households proving resilient to Iran war disruptions, but weakness is around the corner, Paul Dales at Capital Economics says in a note. Consumer have so far largely absorbed the impact of higher energy costs by saving less rather than sharply cutting spending or increasing borrowing, he says. "Even so, we suspect a clearer weakening in real consumer spending growth and housing is just around the corner," he says. Retail sales have already fallen, and mortgage rates have already risen to 5% from around 4%. Still, a weak economic backdrop suggests inflation should remain in check. "We doubt the Bank of England will raise interest rates unless the Strait of Hormuz remains closed for many more months." (don.forbes@wsj.com)
0913 GMT - The options market's measure of expected foreign-exchange swings, or implied volatility, indicates traders are underpricing the risk of further interventions to shore up the Japanese yen, ING's Francesco Pesole says in a note. "Dollar versus the yen short-term implied volatility (one week to three months) has followed a broader fall in G-10 volatility, failing to show the risk of renewed FX intervention as the pair nears 160.00 yen," he says. Markets might be assuming the Bank of Japan will wait to see whether a potential interest-rate rise on June 16 will stem the yen's decline, he says. The dollar trades steady at 159.72 yen. (renae.dyer@wsj.com)
(END) Dow Jones Newswires
June 02, 2026 06:28 ET (10:28 GMT)
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