The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0858 ET - Canadian inflation cooled more sharply than expected last month as drivers saw some respite at the pumps. The consumer price index fell 0.4% on-month, the largest decline since December 2024. In annual terms, inflation decelerated to 2.8% from May's 3.2% and against economist expectations for 3%. Gasoline fell sharply during June and increased at a slower rate on a year-over-year basis than in May. Excluding gasoline, inflation was steady at 2.2%, holding near the Bank of Canada's 2% target. The central bank's preferred median and trim measures averaged 1.85%, a level last that low in September 2020. Still, with global oil prices back up in July, economists remain on watch for signs inflation is taking hold more broadly. (robb.stewart@wsj.com; @RobbMStewart)
0851 ET - The Canadian dollar is holding steady relative to the US dollar despite President Trump's latest threat to impose a new set of tariffs on Canada due to smoke in US cities from Canadian forest fires. Karl Schamotta, chief market strategist at forex firm Corpay, says traders view the threat, which would add pollution-related levies on top of existing duties, "as more smoke than fire, and are not adding to the risk discount embedded in the currency," since the trade war between the two countries escalated last year. (Paul.Vieira@wsj.com; @paulvieira)
0837 ET - Sterling and U.K. government bond yields are little moved after Andy Burnham pledged to improve cost of living in his first speech as prime minister. He promised to end rough sleeping, help more young people into work and build more council homes. Burnham said he would set out some of his measures, including how to pay for them, on Tuesday. The euro falls 0.2% to 0.8487 pounds, little changed from levels before the speech. Ten-year gilt yields rise 2.3 basis points in response to the Middle East conflict, to last trade at 4.972%, Tradeweb data show. (renae.dyer@wsj.com)
0752 ET - Escalation of strikes in the Middle East has pushed energy markets away from the European Central Bank's mild scenario and toward the baseline, which strengthens the case for another quarter-point hike in September, says Antonio Garcia Pascual at Santander CIB. However, only a prolonged disruption with material damage to energy infrastructure would justify a broader hiking cycle, he says in a note. The ECB will focus on indirect inflationary effects through food and core and second-round effect via wages and inflation expectations. Further escalation in Hormuz would raise the risk of supply-chain disruption, he says. Eurozone inflation is likely to stay near 3% through the second half of the year, reaching 3.2% in December, he says. (edward.frankl@wsj.com)
0741 ET - The European Central Bank is set to keep interest rates unchanged this week, with focus turning more to the following meeting, Pimco portfolio manager Konstantin Veit says in a note. "With no new staff projections due until September, the governing council is likely to see value in waiting, particularly given significant changes in energy markets since June," he says. However, lower energy prices, softer-than-expected June inflation, wage growth consistent with the inflation target, and weak economic growth suggest risks are tilted toward fewer hikes than markets price in, he notes. If the ECB ends its hiking cycle with its key rate at or below 2.5%, it will likely seek to preserve policy space and won't reverse the hikes next year, he adds. (edward.frankl@wsj.com)
0731 ET - The Norwegian krone has limited scope to extend its recent appreciation as the Norges Bank might not raise interest rates further, Rabobank's Jane Foley says in a note. The krone is finding support from the recent pick up in oil prices due to a re-escalation in the Middle East conflict as Norway is a major oil producer, she says. However, Norwegian price pressures were more moderate than expected in June. "On the back of doubts regarding further Norges Bank rate hikes, we expect euro-krone to stay close to the 11.00 level on a one-to-three-month view." The euro rises 0.1% to 11.0324 krone, having reached one-month low of 10.9920 earlier, according to LSEG. (renae.dyer@wsj.com)
0714 ET - Bitcoin falls modestly amid rising U.S.-Iran tensions but remains within a relatively narrow range. "Sentiment continues to remain weak around cryptocurrencies, and having already endured so much this year it seems like much of the selling has exhausted itself for now," IG analyst Chris Beauchamp says in a note. Digital assets might struggle for attention in a week dominated by major U.S. earnings and more economic data while risk sentiment continues to be led by oil prices and the Middle East conflict, he says. Bitcoin falls 0.2% to $64,378, LSEG data show. (renae.dyer@wsj.com)
0712 ET - Fixed income markets enter the second half of 2026 supported by resilient economic activity, healthy corporate and consumer balance sheets and favorable market technicals, Aegon Asset Management's Stephen Jones says in a note. Across most sectors, fundamentals remain stable despite headwinds stemming from geopolitics, trade policy, inflation and the pace of AI-driven investment, though the backdrop is more mixed for sovereign markets, the global CIO says. "Concerns around persistent inflation, elevated government borrowing needs and rising fiscal pressures are keeping many central banks cautious and limiting the potential for significant declines in yields," he says. Sovereign debt continues to offer attractive income, diversification benefits and selective opportunities, but elevated bond supply and fiscal deficits remain important headwinds, particularly at longer maturities, Jones says. (emese.bartha@wsj.com)
0710 ET - Investors in U.K. government bonds, or gilts, are eager to find out the spending plans and policy announcements under the new government as Andy Burnham is due to become the U.K. prime minister on Monday. "Burnham's big speech later on [Monday] might offer a glimpse at what he wants to achieve," AJ Bell's Russ Mould says in a note. Ten-year gilt yields climb 2.8 basis points to last trade at 4.978%, Tradeweb data show. (miriam.mukuru@wsj.com)
0709 ET - Yield premium reflecting market expectations of a European Central Bank rate hike later this year is expected to be embedded in the front end of the bond curve, MFS Investment Management's Peter Goves says in a note. "However, we doubt the July ECB will be overly hawkish such that it gears up the front end further," the head of developed-market sovereign debt research says in a note. "Net net, we still see value in the front-end on the assumption there is one more hike left," he says. MFS IM expects the ECB to keep rates on hold this week and the debate has likely shifted to September, he says. However, the ECB is unlikely to precommit to a September move, Goves says. (emese.bartha@wsj.com)
0702 ET - Incoming U.K. Prime Minister Andy Burnham is expected to deliver a cautious autumn budget, but there could yet be surprises for investors, James Smith at ING says in a note. While Burnham has committed to following the country's fiscal rules, he has also outlined bold plans ranging from social-housing investment to nationalization, Smith says. "A boring budget doesn't win elections - nor does it square with Burnham's rhetoric about big change. So a much bolder budget clearly can't be ruled out." Potential surprises include larger public investment, unexpected changed to welfare reform and property tax, as well as broader tax changes, Smith says. Burnham could also seek to exempt areas like defense or investment from fiscal targets, allowing for higher borrowing, he adds. (don.forbes@wsj.com)
0640 ET - U.K. political risk premium declines as Andy Burnham is due to become the new prime minister on Monday, Morgan Stanley strategists say in a note. Geopolitical concerns continue to weigh on U.K. government bonds, but political concerns are easing, the strategists say. Should the Middle East tensions recede, gilt yields are expected to decline, they say. Ten-year gilt yields rise 2.8 basis points to last trade at 4.978%, Tradeweb data show. (miriam.mukuru@wsj.com)
(END) Dow Jones Newswires
July 20, 2026 08:58 ET (12:58 GMT)
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