The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1005 GMT - Short-end U.S. Treasury yields rise, while long-end yields fall in European trade, after the Federal Reserve turned more hawkish Wednesday. The DXY dollar index, meanwhile, rises to an 11-week high of 100.631. The Fed left interest rates on hold, but the statement had a more decisive language on price stability. "However, gains in the dollar could be limited by improving geopolitical sentiment," Exness' Eric Chia says in a note. The U.S. and Iran signed an interim agreement aimed at ending tensions, reopening the Strait of Hormuz, and easing restrictions on Iranian oil exports. The two-year Treasury yield rises 3 basis points to 4.188%, while the 10-year yield falls 0.6 basis points to 4.456%, according to Tradeweb. (emese.bartha@wsj.com)
1002 GMT - The Bank of England is expected to hold interest rates at 3.75% in the coming months, even as the probability of the U.S. Federal Reserve raising interest rates rises, Morgan Stanley's Bruna Skarica says in a note. Thursday's U.K. jobs data signals a fragile labor market, reducing the need for the BOE to increase interest rates to tackle inflation. The Fed signaled readiness to increase interest rates in the coming months during Wednesday's policy decision. "We think in the near term, the BOE is well-positioned to keep its tightening bias and continue to keep rates on hold." (miriam.mukuru@wsj.com)
0952 GMT - After the Swiss National Bank held its policy rate, the central bank could keep rates on hold over the next couple of years, Capital Economics' Harry Chambers says. "Its commentary shows that the bank is confident that the current monetary policy setting will keep inflation within the target range while supporting economic growth," he says in a note. The bank's inflation forecasts inched up, but they remain much lower than what is expected for the eurozone and are a clear signal that Swiss policymakers think that they won't need to raise interest rates, he adds. (edward.frankl@wsj.com)
0927 GMT - The German economy is currently being shaped by conflicting forces, the Ifo Institute's Timo Wollmershaeuser says. On the one hand, Germany's expansionary fiscal policy, including extra spending on infrastructure, climate neutrality, and defense, is expected to add 0.5% to GDP growth in 2026 and 2027, according to the Munich-based research institution. However, the global energy-price shock triggered by the conflict in the Middle East is dragging on household purchasing power and adding disruption to industry, which is expected to shave 0.4% off growth in each year. Meanwhile, the budget deficit is projected to widen sharply to 4.1% of GDP in 2026 and 4.9% in 2027, from 2.8% in 2025, according to Ifo. (don.forbes@wsj.com)
0917 GMT - German's economy is expected to grow by 0.8% this year and next, according to the Ifo Institute. Previously, the Munich-based research institution projected growth of 0.8% for this year and 1.2% for 2027. "The forecast is based on the assumption that the conflict will deescalate in the coming weeks, and the Strait of Hormuz will reopen. Energy prices are then expected to fall gradually but remain above pre-war levels through the end of the forecast period." Global growth is projected at 2.2% in 2026 and 2.4% in 2027, with global trade growth slowing from 3.0% to 2.0%, according to Ifo. Meanwhile headline inflation in Germany is seen at 2.9% in 2026, easing to 2.7% in 2027. (don.forbes@wsj.com)
0916 GMT - The Fed's hawkish tone from the FOMC statement suggests inflation risks aren't fading even if the Iran conflict ends and energy flows normalize, Syfe's head of investment and advisory Ritesh Ganeriwal says. While a rate hike remains possible this year, the move is far from certain and the bar is high, Ganeriwal says, noting the Fed may find less reason to hike if a U.S.-Iran peace deal holds and oil prices stay lower. The U.S. dollar may also weaken, Syfe adds, pointing to new Fed Chair Kevin Warsh saying he lacks conviction in the committee's own economic forecast. Bonds now offer returns that "genuinely compete with stocks for the first time in years," it says. "Every month on the sidelines is income left on the table," it adds. (jason.chau@wsj.com)
0914 GMT - Citi no longer expects India's central bank to hike rates for the current fiscal year, its research analysts write in a note. Citi previously expected two rate hikes of 25 bps each. If the U.S.-Iran deal holds, the Reserve Bank of India won't need to worry about the energy shock, giving it some space to look through the El Nino-driven weather shock. Citi sees a 40bp downside risk to the RBI's inflation forecast, with second-round effects of supply-side shocks also likely to be more muted now. "We would consider bringing back RBI rate hike expectations if there is any breakdown in the Middle East truce or the El Nino shock destabilizes inflationary expectations," Citi says. (kimberley.kao@wsj.com)
0904 GMT - The cost of default protection for euro-denominated credit falls as lower oil prices boost market sentiment and push up risk appetite. "Risk appetite has returned after President Trump signed an interim agreement aimed at resolving the Iran conflict and reopening the Strait of Hormuz," Tickmill Group's Patrick Munnelly says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 1 basis point to 251bps, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0903 GMT - Sterling falls to a 10-week low against the dollar and a three-week low against the euro as investors brace for the Bank of England's policy decision and a U.K. special election Thursday. The BOE is expected to leave rates unchanged but the focus is on whether it will endorse market bets for a rate rise by year-end. Given recent soft data and lower-than-anticipated inflation, the BOE is likely push back against rate-rise expectations, Monex Europe analysts say in a note. Meanwhile, the political risk premium looks underpriced, they say. Thursday's special election could lead to a leadership challenge for Prime Minster Keir Starmer. Sterling falls as low as $1.3239. The euro rises to a high of 0.8671 pounds. (renae.dyer@wsj.com)
0842 GMT - The Czech koruna could rise if the Czech National Bank raises interest rates by 25 basis points to 3.75% as expected and signals further rate increases in a decision at 1230 GMT, ING's Frantisek Taborsky says in a note. Core inflation remained elevated at 2.9% in May and first-quarter wages were higher than expected. The reasons for raising rates are therefore more local than directly related to the Middle East conflict, he says. If the CNB lifts rates along with hints of further tightening, it could cement expectations for at least one more rate increase this year, he says. The euro rises 0.1% to 24.161 koruna, but ING sees scope for it to fall below 24.000 after the decision. (renae.dyer@wsj.com)
0838 GMT - Shares in U.K. housebuilders fall after the U.S. Federal Reserve kept interest rates unchanged. The Fed signaled it is worried about inflation with price stability emerging as the winning force, and officials inclined to hike interest rates this year, Swissquote analyst Ipek Ozkardeskaya says in a note. "The bad news is that the latest ECB and Fed decisions showed that policymakers do not necessarily rely on the idea that lower oil prices will immediately cool inflationary pressures," Ozkardeskaya says. Persimmon is down 6.1%, with Crest Nicholson down 2.2%, Barratt Redrow down 1.8% and Berkeley down 1.6%. (anthony.orunagoriainoff@dowjones.com)
0829 GMT - The Norwegian krone briefly falls before turning higher after the Norges Bank held interest rates at 4.25% but signalled it could raise rates at one of its upcoming meetings due to elevated inflation. Market pricing on LSEG had shown a 72% chance of unchanged rates and a 28% chance of a 25 basis-point increase. The central bank said the U.S.-Iran interim peace deal could lead to lower external price pressures than currently assumed if energy markets normalize quickly. If labor market conditions become weaker than projected or inflation pressures ease faster, rates might become lower than currently envisaged, it said. The euro is last down 0.1% at 11.0436 krone. It initially rose to 11.0660 after the decision, from 11.0500 beforehand. (renae.dyer@wsj.com)
(END) Dow Jones Newswires
June 18, 2026 06:05 ET (10:05 GMT)
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