The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0824 GMT - Investors are keen to find out who will serve in the U.K.'s new cabinet as Andy Burnham is poised to become U.K. prime minister on Monday following Keir Starmer's resignation. Burnham is also expected to provide more detail on economic plans and briefings on policy plans, Barclays economists say in a note. Media reports indicate that Shabana Mahmood, who is considered to be a centrist candidate, could become the new treasury chief. U.K. 10-year gilt yields rise 2.2 basis points to 4.972%, Tradeweb data show. (miriam.mukuru@wsj.com)
0814 GMT - Sterling could rise slightly further if markets grant incoming Prime Minister Andy Burnham a honeymoon period, ING's Chris Turner says in note. However, gains could prove limited as the U.K.'s tight fiscal situation suggests a new cabinet will need to raise taxes to fund plans to improve areas such as social care, he says. The euro could fall to as low as 0.8400 pounds this summer but further falls look unlikely, he says. The euro falls 0.1% to 0.8492 pounds, having reached a 13-month low of 0.8453 on Wednesday, LSEG data show. A large part of sterling's recent strength reflects investors closing stale short positions which bet on the currency weakening, Turner says.(renae.dyer@wsj.com)
0804 GMT - A tighter correlation between energy prices and short-dated euro swap rates seems to be supporting the euro as the Middle East conflict escalates, ING's Chris Turner says in a note. Higher energy prices have driven a sizeable narrowing in euro-dollar two-year swap spreads, he says. Two-year euro swap rates are trading at a new high for the year, while last week's lower-than-expected U.S. inflation data has left short-dated U.S. rates off their highs, he says. "We do favor the euro moving back below $1.14 on these high energy prices, but we are cognisant of the risk of a surprise rate hike from the European Central Bank this Thursday." The euro rises 0.1% to $1.1445.(renae.dyer@wsj.com)
0754 GMT - Markets raise their bets on the prospects of the Bank of England increasing interest rates in the coming months due to rising oil prices. Escalating hostilities between the U.S. and Iran over the weekend earlier caused the price of Brent crude to rise above $90 per barrel, increasing concerns about prospects of higher inflation. Markets price in a total of 42 basis points of BOE rate increases in 2026, 4 basis points higher than Friday's pricing, LSEG data show. (miriam.mukuru@wsj.com)
0727 GMT - Sterling rises as Andy Burnham is set to become the U.K.'s prime minister Monday. It completes a surprisingly smooth transition of power from Keir Starmer who announced his resignation as prime minister last month, Commerzbank's Thu Lan Nguyen says in a note. The market appears to be betting that the period of political turmoil and recurring scandals in recent years is coming to an end, she says. However, Burnham needs to revive the economy while consolidating the public finances, she says. "If he fails to achieve either of these goals, the currently positive sentiment could quickly reverse." The composition of his cabinet will be key, she says. Sterling rises 0.1% to $1.3465. The euro falls 0.1% to 0.8493 pounds. (renae.dyer@wsj.com)
0726 GMT - Yields on U.K. government bonds climb as the U.S.-Iran conflict drives up oil prices, raising inflation risk. Investors are concerned that the prolonged hostilities could push up inflation and cause the Bank of England to increase interest rates. Ten-year gilt yields climb 4.4 basis points to last trade at 4.994%, Tradeweb data show. (miriam.mukuru@wsj.com)
0717 GMT - Eurozone government bond yields rise in opening trade, in line with U.S. Treasury yields, as higher oil prices reignite inflationary fears. The significant military escalation between the U.S. and Iran has driven Brent oil back above $90 per barrel, last trading 3.2% higher at $90.91. The rise in oil prices will concern policymakers at the European Central Bank ahead of Thursday's decision. However, money markets continue to suggest the ECB won't raise rates until September, LSEG data show. Yields on the 10-year German Bund, maturing in August 2036, rises 2.2 basis points to 3.145%, while the increase is slightly more on bonds of eurozone peers, according to LSEG. (emese.bartha@wsj.com)
0705 GMT - AI could have more immediate inflationary impact in South Korea and Taiwan, which are upstream hardware suppliers, HSBC economists say in a research note. Bottlenecks in high‑tech components and logistics are lifting producer prices in these key upstream markets, they say. Central banks in Korea and Taiwan could have to tighten monetary policies in response to the inflation, they say. HSBC expects one additional hike from each bank by the end of this year. Meanwhile, there could be upside risk for further tightening in 2027, depending on the extent of pass-through from surging AI exports into domestic activity, they add.(sherry.qin@wsj.com)
0658 GMT - Bitcoin falls slightly as an escalation in the Middle East conflict weighs on risk appetite. The U.S. military announced a ninth consecutive night of attacks targeting Iran late Sunday after a U.S. service member was killed. "With no important U.S. data scheduled today, bitcoin's direction will depend mainly on exchange traded fund flows, the dollar, Treasury yields, geopolitical developments and progress toward clearer crypto regulation," Zaye Capital Markets analyst Naeem Aslam says in a note. Bitcoin falls 1.0% to $63,845, LSEG data show. (renae.dyer@wsj.com)
0653 GMT - The dollar trades steady, showing little reaction to an escalation in strikes between the U.S. and Iran. The U.S. military announced a ninth consecutive night of attacks late Sunday, pushing oil prices higher. "In part, we think markets are now more comfortable with the risks stemming from disrupted energy supply," Monex Europe analysts say in a note. With the U.S. economy likely to slow in coming months, a modest pullback in the dollar "looks fair to us," they say. The DXY dollar index trades flat at 100.761. (renae.dyer@wsj.com)
0612 GMT - U.S. Treasury yields rise across maturities in European trade, reflecting an escalation of the Middle East conflict and a subsequent rise in oil prices. "President Trump's defense of expanded U.S. strikes on Iran has strengthened fears that the confrontation could last longer or move beyond its original objectives," Zaye Capital Markets CIO Naeem Aslam says in a note. Trump's remarks matter for oil because any escalation near production facilities, export terminals or key shipping routes could remove barrels from the global market before producers can replace them, Aslam says. The 10-year U.S. Treasury yield is up 2.9 basis points at 4.569%, according to LSEG. (emese.bartha@wsj.com)
0611 GMT - OpenAI and Anthropic have reached extraordinary valuations and are both reportedly considering public listings. Valuations rest on the assumption that AI spending will continue expanding, says Ipek Ozkardeskaya, market strategist at Swissquote. The problem is that Chinese AI models are said to cost up to 100 times less, which could force U.S. providers to reduce prices, she says. Lower prices would compress revenue expectations, making the current eye-watering valuations increasingly difficult to justify. The mismatch is already striking, she adds. OpenAI is generating roughly US$25 billion in annualised revenue against an US$852 billion valuation, she says.(james.glynn@wsj.com; @JamesGlynnWSJ)
(END) Dow Jones Newswires
July 20, 2026 04:24 ET (08:24 GMT)
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