The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1051 GMT - The cost of insuring euro credit against default declines due to increased optimism ahead of the potential reopening of the Strait of Hormuz on Friday. Oil prices have dropped, easing the near-term inflation outlook and raising demand for risky assets. Below-forecast U.K. inflation data for May has added to the positive market sentiment. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 1 basis point to 249bps, S&P Global Market Intelligence data show. The iTraxx Main index of euro investment-grade CDS falls 1bp to 51bps. (miriam.mukuru@wsj.com)
1030 GMT - U.S. Treasury yields and the dollar edge slightly higher, showing limited moves ahead of the Federal Reserve's rate decision at 1800 GMT. "Markets could remain particularly attentive to this meeting, being the first one chaired by Kevin Warsh, for clues on any changes in the Fed's communications, in addition to the implications of easing geopolitical tensions," DHF Capital S.A's Bas Kooijman says in a note. The Fed is expected to leave interest rates on hold but the accompanying statement, updated projections and Warsh's press conference could provide clues on the future path of interest rates, he says. The 10-year Treasury yield is up 0.6 basis points at 4.433%, according to Tradeweb. The DXY dollar index rises 0.1% to 99.613. (emese.bartha@wsj.com)
1015 GMT - With U.K. inflation undershooting expectations, holding at 2.8% in May, the sting from the Iran conflict looks less than markets initially assumed, Deutsche Bank's Sanjay Raja says in a note. "This could give the Bank of England some pause for thought. Indeed, it could buy [policymakers] more time to assess the risks around so-called second round effects," he says. Despite rising energy costs, retailers remain hesitant to price in any cost pass-through, Raja notes. And with the tentative U.S.-Iran agreement, oil prices are already around 10% below last month's market assumptions. The Ofgem regulated price cap could be lower rather than higher come October 2026, bringing much-needed relief for U.K. households and businesses, he says. (edward.frankl@wsj.com)
1007 GMT - The details of the interim U.S.-Iran peace deal are a positive development for the euro-dollar exchange rate, ING's Francesco Pesole says in a note. The deal includes financial incentives for Iran to wind down the conflict with the U.S. allowing Iran to immediately begin selling oil and fuel upon signing the agreeing this week, the WSJ reports. These incentives makes the fall in oil prices look more sustainable and therefore reduce the "downside risks" for the euro versus the dollar, he says. However, the exchange rate's direction also depends on any clues from the Federal Reserve about its interest rate path when it announces its decision at 1800 GMT, he says. The euro trades steady at $1.1602. (renae.dyer@wsj.com)
0948 GMT - Bank of England policymakers will be reassured that they can leave interest rates on hold with headline inflation holding at 2.8% in May and oil prices dropping this week, Fitch Ratings' Economics' Jessica Hinds says. There was little sign that higher energy prices had pushed up the cost of other items, she says in a note. Admittedly, the 13% rise in the Ofgem price cap next month will still lift headline inflation in the second half of the year. "But the sharp drop in the oil price this week, providing it is sustained, will guard against a further rise in inflation expectations." This combined with a weak labor market, details of which are published Thursday, means the BOE will likely leave rates on hold through 2026 before resuming cuts in 2027, Hinds says.(edward.frankl@wsj.com)
0947 GMT - Although April's Land Registry data presents a broadly positive headline, investors shouldn't read too much into this acceleration, RBC Capital Markets analysts say. Average U.K. house prices reached 270,000 pounds and annual inflation rebounded to 3.8% from March's 0.0%. However, this jump was driven by a favorable base effect from April 2025's 2.9% monthly price fall when Stamp Duty Land Tax thresholds were reset. Transactions remain fragile, sentiment indicators are firmly negative, and the Bank of England's mortgage approvals remain below the levels needed to declare a durable recovery, RBC says. "This is a market that is healing, slowly, but has not yet turned the corner." Crest Nicholson shares rise 4.7%, and Vistry is up 3.6% (anthony.orunagoriainoff@dowjones.com)
0931 GMT - Shares in U.K. housebuilders rise as hopes of lower inflation and interest rate cuts buoy the market. May's inflation softened by 50 basis points relative to April's projection, including a 20-basis-point downward variance in services inflation, Davy Research analyst Kevin Timoney says. Lower energy prices and limited scope for faster wage growth mean rate cuts by the Bank of England could take place before the end of 2026, Timoney says. "The weakness of the labor market and the U.K. economy in general is a key justification for our view as it implies limited demand-driven inflation is likely to take hold this year," Timoney says. Crest Nicholson shares are up 5.1%, followed by Vistry, up 3.6%, with Bellway up 1.8% and Berkeley up 1.4%. (anthony.orunagoriainoff@dowjones.com)
0929 GMT - U.K. inflation strengthens the case for the Bank of England not hiking at all this year and instead keeping interest rates steady, Investec's Sandra Horsfield says in a note. The unchanged rate of 2.8% in May paints a brighter picture than expected, with only two subcategories of inflation--transport and, to a much lesser extent, communication--pushing up on the overall rate. The print release should reassure policymakers there is no urgency to hike rates, even as money markets price in one rate increase this year. "Even this, we think, could be unnecessary in an economy where a shakier jobs market limits the risk of second-round inflation building," Horsfield says. (edward.frankl@wsj.com)
0915 GMT - The Federal Reserve's policy decision at 1800 GMT could test the dollar's resilience to lower oil prices after the U.S. and Iran agreed an interim peace deal, ING's Francesco Pesole says in a note. The dollar needs confirmation that policymakers, especially new Fed Chair Kevin Warsh, are open to raising rates in future even if rates are held steady Wednesday, he says. "If Warsh or the broader Federal Open Market Committee signal a stance that is clearly at odds with market pricing, the dollar would sell off sharply." However, removing the policy easing bias should be enough to support the currency, he says. The DXY dollar index trades flat at 99.561. (renae.dyer@wsj.com)
0845 GMT - The next Bank of England move is more likely a cut than a hike, says Tomasz Wieladek, economist at T. Rowe Price, in a note. U.K. inflation in May held steady at 2.8%, surprising to the downside for the second month in a row. Food inflation was significantly weaker than expected, and even excluding food most categories contributed negatively to May's inflation, he says. "Monetary policy in the U.K. appears to be finally working. A prolonged period of restrictive monetary policy has, to a degree, weakened inflation dynamics." Policymakers will therefore conclude that no more hikes are necessary to stabilize inflation, especially given the shock to the real economy from the conflict in the Middle East, Wieladek says. (edward.frankl@wsj.com)
0833 GMT - Singapore's non-oil domestic exports growth for 2026 is likely to beat official estimates after reporting stronger-than-expected performance in May, Maybank economists say in a note. NODX jumped to a 22-year high in May, led by electronics shipments. The city-state's exports and manufacturing sector are likely to remain robust in 2H, driven by the continuous global artificial-intelligence capex boom. Petrochemicals production could also recover in 2H as supply disruptions ease with reopening of the Strait of Hormuz. Maybank raises its NODX growth forecast for 2026 to 15% from 4.5%, above Enterprise Singapore's 3%-5% projection.(amanda.lee@wsj.com)
0828 GMT - If Federal Reserve Chairman Kevin Warsh talks of potential disinflationary pressures beyond the war, this could be a signal that interest-rate cuts are possible, Jefferies' Mohit Kumar says in a note. Aside from the war, AI and technology are the largest supply side shocks to the system, the global economist says. AI should lead to lower employment, lower inflation, but better productivity and better growth, he says. "If we have a shock to the system that leads to lower employment and lower growth, [the] Fed should respond by cutting rates," Kumar says. Warsh will debut as Chairman at Wednesday's meeting where the Fed is expected to keep the fed funds target range rate unchanged at 3.50%-3.75%. (emese.bartha@wsj.com)
(END) Dow Jones Newswires
June 17, 2026 06:52 ET (10:52 GMT)
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