The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1014 GMT - Investors' focus is on upcoming inflation data as they assess the potential path of future central banks' interest rate decisions, Capital.com's Daniela Hathorn says in a note. The U.S. inflation data for May is due to be released on Wednesday. "With expectations for a [U.S. Federal Reserve] rate hike by year-end rising sharply over the past week, inflation data now has the potential to either reinforce or challenge that repricing," she says. Investors fully price in one quarter-point rate rise by the Fed by the end of 2026, LSEG data show. (miriam.mukuru@wsj.com)
0951 GMT - Expectations for U.S. interest-rate rises are limiting the dollar's decline in reaction to Israel and Iran pausing strikes, MUFG Bank's Lee Hardman says in a note. The market is now pricing in multiple U.S. rate rises in the year ahead, moving yield spreads back in the dollar's favor, he says. The next key test for rate expectations will be U.S. inflation data on Wednesday. While a pick-up in inflation is widely anticipated in coming months, it argues against the Federal Reserve keeping rates steady, he says. "Last week's stronger nonfarm employment report has made it more likely that the Fed will at least drop their easing bias at the [June 17] meeting." The DXY dollar index falls 0.2% to 99.813. (renae.dyer@wsj.com)
0949 GMT - A possible change to the U.K. leverage-ratio structure for top U.K. banks could increase their leverage capacity by around 250 billion pounds ($333.5 billion) and boost demand for short-dated gilts, Morgan Stanley strategists say in a note. "Outright gilt buying would likely be gradual, as banks adjust 'high-quality liquid assets' portfolios over several quarters," the strategists say. (miriam.mukuru@wsj.com)
0949 GMT - The ECB looks set for one or more interest rate hikes this year, which would be a mistake, Holger Schmieding at Berenberg says in a note. "The last thing the eurozone needs is a further headwind in the form of higher interest rates to exacerbate the Iran war damage," Schmieding says. Consumer confidence is already at crisis levels, while private-sector activity is contracting. Meanwhile, oil prices have receded, and wage demands look limited. "The inevitable temporary surge in prices thus seems unlikely to turn into a protracted inflation problem." Still, upward revisions to ECB inflation forecasts look likely. More rate increases could therefore be on the horizon, dragging further on the eurozone economy. "It could even fall into an unnecessary recession," he says. (don.forbes@wsj.com)
0945 GMT - German industry rebounded modestly in April, and the upward revision to March paints a slightly better picture of industry at the end of the first quarter, Pantheon Macroeconomics' Claus Vistesen says in a note. Industrial production rose 0.4%, after a revised 0.1% decline in March. "It's early days, and geopolitical uncertainty is a downside risk, but we see a good chance of a rebound in manufacturing in 2Q," Vistesen says. Survey data continues to signal upside risk to production growth, despite weakening in April and May, he says. The truck-toll index rise for May also sends a positive signal for output, he adds. Exports also climbed in April by 0.9% on the month, extending the upturn from March after it boosted GDP growth in the first quarter. (edward.frankl@wsj.com)
0927 GMT - Indonesia's Jakarta Composite Index closed 7.6% higher at 5746.65 following the central bank's move to raise rates in an off-cycle meeting on Tuesday. The benchmark index snapped a four-session losing streak and marked its biggest one-day percentage gain since March 2020. BI's move to tighten monetary policy highlighted its commitment to maintaining orderly currency movements, which should lend support to the rupiah going forward, said DBS's Radhika Rao in an email. Among gainers, hospitality company Red Planet Indonesia rose 27%, coal logistic firm Dana Brata Luhur added 23%. Meanwhile, Sentra Food Indonesia shed 9.0% and hospitality services firm Island Concepts Indonesia fell 13%. (amanda.lee@wsj.com)
0922 GMT - Bitcoin's recovery potential looks limited unless the dollar weakens considerably, XM analyst Achilleas Georgolopoulos says in a note. The cryptocurrency last trades down 1.1% at $62,750, although it has recovered slightly from the 20-month low of $59,125 reached Friday, LSEG data show. A sustained rise towards $75,000 is necessary to invalidate the current negative sentiment, Georgolopoulos says. "With risk appetite being positive but not benefiting cryptos, it appears difficult to envisage a scenario in which bitcoin jumps higher that does not involve a significant dollar depreciation." (renae.dyer@wsj.com)
0919 GMT - The AI supercycle is powering China's trade, a trend that bodes well for its economy, Citi analysts say. Exports and imports accelerated in May, with growth in the former driven by AI hardware, masking weakness in labor-intensive goods, Xiangrong Yu and Yuanliu Hu write. Imports were also heavily tech-led. Citi expects the export strength to extend through the summer, providing crucial support for headline GDP despite growth remaining K-shaped, characterized by outperformance in some sectors and decline in others. "Fiscal and quasi-fiscal deployment may accelerate, but we don't expect an outright budget/bond quota revision this year," they add. Citi expects a meaningful recovery in shipments to the U.S. as ties stabilize, and a tailwind for clean-tech exports from the Middle East conflict. (fabiana.negrinochoa@wsj.com)
0916 GMT - A stabilizing U.S.-China relationship bodes well for China's direct exports to the U.S., HSBC economist Taylor Wang says in a research note. China's May exports to the U.S. accelerated further, rising 35% on year. Besides a low base effect, a stabilizing U.S.-China trade relationship, the narrowing of the U.S. tariff gap versus China's trading partners and China's relative manufacturing resilience amid the Middle East conflict likely also provided support, the economist says. The proposed U.S.-China Board of Trade will likely create a clearer pathway for further tariff reductions on labor-intensive consumer goods and boost direct exports to the U.S., Wang notes. Further improvements in direct China-U.S. trade could potentially help ease trade tensions between China and the EU, he adds. (sherry.qin@wsj.com)
0915 GMT - Bank Indonesia could continue its tightening cycle, raising its policy rate by an additional 50 basis points at next week's meeting, UOB economists Enrico Tanuwidjaja and Vincentius Ming Shen say in a note. With forex intervention and higher yields on the central bank's rupiah securities proving insufficient to stabilize the rupiah, policymakers are expected to rely primarily on benchmark-rate adjustments rather than alternative instruments, they say. Following Tuesday's off-cycle rate hike, the central bank could raise rates further to 6.00% this month, UOB says. BI will likely follow up with 25-basis-point increases in 3Q and 4Q, taking the terminal rate to 6.50% by end-2026, it adds. (yingxian.wong@wsj.com)
0912 GMT - Fitch Ratings has changed its 2026 global sovereign sector outlook to "deteriorating" from "neutral" because of the impact of the U.S.-Iran war, it says in a mid-year outlook. "We expect the conflict will weaken GDP growth, raise inflation and bond yields, and heighten geopolitical risks," but recent resilience of the global economy and financing conditions temper risks, it says. Greater China is the only region to improve--to "neutral"--as robust exports sustain growth and deflation appears to be ending, Fitch says. "Crude oil inventories, domestic refining capacity and diversified energy sources shield Greater China from the energy shock." Strong AI-related exports support many Asia-Pacific sovereigns, but that region's economies are highly energy-intensive and reliant on oil and gas imports through the Strait of Hormuz, it says. (emese.bartha@wsj.com)
0912 GMT - The Russian ruble is being supported by a recent significant improvement in Russia's oil and gas revenues on elevated energy prices due to the Iran war, Commerzbank's Tatha Ghose says in a note. However, energy prices will likely drift lower by year-end while refinery damage from Ukrainian strikes and the re-imposition of U.S. sanctions should prevent Russia from utilizing the newly expanded OPEC+ output quota in the medium term, he says. "Once the oil-price bonanza is out of the way, we expect the [ruble] to resume depreciating." The dollar falls 1.9% to a one-week low of 71.4205 rubles, according to LSEG. Commerzbank expects the dollar to reach 75.0000 rubles by the end of 2026 and 90.0000 by end-2027. (renae.dyer@wsj.com)
(END) Dow Jones Newswires
June 09, 2026 06:15 ET (10:15 GMT)
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