The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0922 GMT - U.S. Treasury yields and the dollar are little changed in European trade, awaiting CPI data, while renewed Middle East escalations could support safe-haven runs into the currency. "The U.S. dollar remained relatively steady as escalating tensions in the Middle East continued to support safe-haven demand," Kudotrade's Konstantinos Chrysikos says in a note. Continued instability in the region could sustain defensive flows into the dollar and could push bond yields to the upside in the days ahead, he says. A "hot" CPI print could cement expectations of tighter Federal Reserve monetary policy and push the dollar and yields to the upside, he says. The 10-year Treasury yield is stable at 4.526%, according to Tradeweb. The DXY dollar index is stable at 99.915. (emese.bartha@wsj.com)
0913 GMT - China's policy rate is likely to remain stable in the near term, UOB economist Ho Woei Chen says in a research note. UOB maintains continues to expect the People's Bank of China to keep the 7-day reverse repo rate steady at 1.40% through 2026 as inflation risks appear to be manageable and economic growth remains the key priority for the government. She notes that a 25bp-50bp cut to banks' reserve requirement ratio is still possible as credit demand has stayed subdued. Beijing is likely to rely on fiscal policy, and could step up government spending to cushion external shocks and offset weak private sector demand, she notes. (tracy.qu@wsj.com)
0901 GMT - The cost of insuring euro credit against default remains steady as investors await the U.S. inflation data set to be released at 1230 GMT. The data is likely to provide clues on the potential direction of future U.S. interest rate decisions. "Following last week's stronger-than-expected jobs report, investors have become increasingly concerned that inflation may remain too persistent for the [U.S. Federal Reserve] to maintain a neutral stance," Capital.com's Daniela Hathorn says in a note. The iTraxx Europe Main index of euro investment-grade credit default swaps is unchanged at 54 basis points, S&P Global Market Intelligence data shows. (miriam.mukuru@wsj.com)
0849 GMT - The European Central Bank could deliver two back-to-back interest-rate increases this summer rather than waiting until September, Indosuez Wealth Management's CIO Office says in a note. "We anticipate two temporary rate hikes by the ECB this year, in June and July," it says. The main driver of that scenario is the continued rise in inflation expectations, it says. "In our view, the ECB is increasingly concerned about the risk of inflation expectations becoming anchored, especially as surveys continue to show rising intentions to increase selling prices." At the same time, it doesn't see convincing evidence of significant second-round effects. "We therefore do not believe the ECB should embark on a prolonged tightening cycle." (emese.bartha@wsj.com)
0844 GMT - China's producer-price index may continue to rise in the near term, UOB economist Ho Woei Chen says in a note. Considering the low base of comparison, and with energy and commodity prices remaining elevated, producer inflation could accelerate beyond 4% in 3Q, she says. However, transmission to the consumer-price index will be capped by weak domestic demand and food deflation, the economist adds. UOB backs its 2026 forecasts for China's PPI to rise 2.8% and headline CPI to increase 1.3%. (tracy.qu@wsj.com)
0844 GMT - China's producer-price index may continue to rise in the near term, UOB economist Ho Woei Chen says in a note. Considering the low base of comparison, and with energy and commodity prices remaining elevated, producer inflation could accelerate beyond 4% in 3Q, she says. However, transmission to the consumer-price index will be capped by weak domestic demand and food deflation, the economist adds. UOB backs its 2026 forecasts for China's PPI to rise 2.8% and headline CPI to increase 1.3%. (tracy.qu@wsj.com)
0839 GMT - Yields on U.K. government bonds, or gilts, are fairly high compared to their U.S. and eurozone equivalents, indicating that investors are pricing in a political-risk premium, Tickmill Group's Patrick Munnelly says in a note. Political tensions could resurface ahead of the special election in the Makerfield constituency next week, where Andy Burnham--a U.K. leadership hopeful--is running for a parliamentary seat. "Makerfield byelection may sharpen the political narrative, but it is unlikely to resolve uncertainty around leadership, fiscal rules or the direction of policy," Munnelly says. Ten-year gilt yields trade flat at 4.911%, higher than the U.S. 10-year Treasury yields at 4.536%, and the 10-year German Bund yields at 3.055%, Tradeweb data show. (miriam.mukuru@wsj.com)
0832 GMT - The productivity growth gap between the U.S. and Europe could largely disappear in 2027 and 2028, Andrew Wishart at Berenberg says in a note. AI investment in the U.S. is unlikely to sustain durable economic growth, with a shift toward imported hardware already offsetting any boost to GDP growth, Wishart says. Meanwhile household consumption faces a hit from stalling population growth and flat incomes. This should drag growth to 1.5% from about 2%, Wishart says. "Trump's erratic policymaking has created uncertainty while surging AI investment and overly loose fiscal policy have raised the cost of capital across the economy, crowding out other private sector investment." In Europe, productivity growth should rebound following the energy shock. Added capacity from AI technology should also boost productivity growth across European economies, Wishart adds. (don.forbes@wsj.com)
0830 GMT - The Bank of Canada could keep interest rates unchanged and signal the possibility of future rate rises Wednesday, but this would only offer modest support to the Canadian dollar, Monex Europe analysts say in a note. The currency's direction is more likely to be driven by U.S. inflation data at 1230 GMT and geopolitics after the U.S. launched strikes against Iran on Tuesday, they say. The BOC's decision is at 1345 GMT. The market expects rates to be held at 2.25%, but is fully pricing in a 25 basis-point rate rise by December, LSEG data show. The U.S. dollar last trades down 0.1% at 1.3932 Canadian dollars. (renae.dyer@wsj.com)
0813 GMT - Gold slides 2% as fresh U.S.-Iran strikes raise fears that a prolonged conflict and higher oil prices could fuel inflation and prompt interest-rate hikes by the Federal Reserve. The U.S. launched military strikes Tuesday against Iran in response to the downing of a U.S. Apache helicopter near the Strait of Hormuz, while Iran's Islamic Revolutionary Guard Corps launched a drone attack on the U.S. Fifth Fleet in Bahrain. The latest escalation has increased uncertainty over prospects for a peace agreement and gradual reopening of the Strait, a critical artery for global energy shipments. "The precious metal is now roughly 20% below its pre-conflict level, with additional selling pressure emerging after prices fell below key technical support levels closely watched by investors," analysts at MUFG say. In early trading, New York gold futures are down 2.3% to $4,185.70 a troy ounce. (giulia.petroni@wsj.com)
0801 GMT - The latest energy shock creates a more challenging macro backdrop for the euro area, as it combines upward pressure on headline inflation with weaker real growth prospects, Eurizon's Massimo Spadotto says in a note. The impact for fixed income markets has so far been concentrated at the front end of government curves, through a repricing of European Central Bank rate expectations, the head of fixed income says. While underlying growth dynamics remain soft, "the central bank is likely to closely monitor the risk of second-round inflation effects, before moving decisively on policy tightening." Markets might continue to scale back expectations for rapid rate hikes, while the long end of the curve could remain under pressure, he says. (emese.bartha@wsj.com)
0746 GMT - AI advancements have likely had a modest positive impact on U.S. employment, based on the latest jobs data, Capital Economics' Stephen Brown says in a note. "We are now beginning to see clearer positive effects of the data centre buildout on manufacturing and non-residential construction payrolls," he says. Since the start of the year, jobs in non-residential construction and manufacturing industries linked to data centre build-out have notably increased, Brown says. "At the micro level, several recent [U.S. Federal Reserve] papers fail to find evidence that AI use is causing any noticeable labor market weakness." (miriam.mukuru@wsj.com)
(END) Dow Jones Newswires
June 10, 2026 05:22 ET (09:22 GMT)
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