The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1102 GMT - 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)
1040 GMT - 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)
1029 GMT - The Indian rupee faces pressure from escalating geopolitical tensions that drove a rally in crude oil prices and risk-averse sentiment, says Dilip Parmar, senior research analyst at HDFC Securities in a note. However, market anticipation of an intervention by the central bank managed to cap the currency's downside, Parmar says. From a technical standpoint, the spot U.S. dollar-rupee pair faces resistance at 96.50 and support around 95.80, Parmar adds. The dollar is 0.2% higher at 96.4450 rupees.(kimberley.kao@wsj.com)
1002 GMT - European stocks will perform strongly despite escalating hostilities in the Middle East and the prospect of tighter European Central Bank policy, UBS strategists say. Higher energy prices could cause the ECB to raise interest rates by a quarter percentage point in September, but "still-fragile economic growth outlook should prevent that move from developing into a sustained hiking cycle." Improved manufacturing on the continent and rising corporate earnings will benefit European stocks, while an increase in German government spending should lift domestic demand, the strategists say. "We believe investors should look beyond the recent weakness in European stock." The Europe-wide Stoxx 600 rises 0.15%. (josephmichael.stonor@wsj.com)
0934 GMT - U.S. Treasury yields rise as military hostilities in the Middle East escalate further, while the dollar is relatively stable amid demand for safe-haven assets. The Middle East conflict has lifted oil prices and could push Treasury yields higher as they reinforce market expectations of a rate hike by the Federal Reserve, Hola Prime's Somesh Kapuria says in a note. "Elevated energy costs could reinforce the expectations that the Federal Reserve could raise interest rates," he says. Despite weaker-than-expected inflation figures published last week, the Fed is still expected to increase rates before year-end, he says. The 10-year U.S. Treasury yield rises 1.7 basis points to 4.556%, according to Tradeweb. The DXY dollar trades steady at 100.785. (emese.bartha@wsj.com)
0921 GMT - The euro should benefit if the European Central Bank strongly signals it is willing to raise interest rates further as the escalating Middle East conflict pushes up energy prices, Commerzbank's Thu Lan Nguyen says in a note. The ECB is expected to leave rates unchanged Thursday but raise rates again in September. Given the rise in energy prices, it is crucial how clearly the ECB underscores that it is prepared to raise rates beyond September, she says. "This is likely to be decisive in limiting the downside potential in euro versus the dollar in the event of a further escalation in the U.S.-Iran conflict." The euro trades steady at $1.1438. (renae.dyer@wsj.com)
0908 GMT - Sterling is unlikely to rise much further in response to higher U.K. real yields adjusted for inflation and reduced fiscal concerns, MUFG Bank's Lee Hardman says in a note. "After recent strong gains, we believe that a lot of good news is now priced into the pound which should curtail further upside." Higher energy prices due to the U.S.-Iran conflict have lifted U.K. bond yields. Markets have scaled back initial worries over political risks as incoming Prime Minister Andy Burnham has pledged to be fiscally responsible. Reports that Burnham will pick Home Secretary Shabana Mahmood as his treasury chief could ease fiscal concerns, he says. Sterling rises 0.1% to $1.3470. The euro falls 0.1% to 0.8494 pounds. (renae.dyer@wsj.com)
0905 GMT - The cost of insuring euro-denominated credit against default remains steady but relatively high due to cautious sentiment amid the U.S.-Iran war. Over the weekend, the U.S. attacked Iranian military sites after two U.S. service members were killed by Iranian missiles in Jordan. The escalating conflict is pushing up oil prices and reducing appetite for risk. The iTraxx Europe Crossover index of euro high-yield credit default swaps is unchanged at 257 basis points, after climbing 6 basis points to that level on Friday, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0853 GMT - Fixed income assets enter the third quarter of the year on a stronger footing than many expected, but the path forward is less straightforward, Principal Asset Management says in a note. Yields are elevated, fundamentals are broadly healthy while demand for income continues to support markets. "That combination gives investors a solid starting point," the asset manager says. At the same time, healthy fundamentals are now largely reflected in valuations, with credit spreads tighter across much of the market, leaving less room for error across sectors, it says. Principal AM sees the biggest shift in recent months around policy expectations, as markets have moved from confidently anticipating rate cuts to debating whether policy may need to stay restrictive for longer. (emese.bartha@wsj.com)
0826 GMT - Malaysia's export growth is likely to moderate in 2H as favorable base effects fade, MBSB Research says in a report. The country's saw robust export performance in 1H, rising 27.5% on year, thanks to resilient global demand for technology products, inventory building, higher re-exports as well as positive price effects. However, exports continue to be exposed to headwinds such as supply disruptions, potentially weaker demand, risks of tighter trade rules as well as elevated costs and price pressures. MBSB Research expects Malaysia's exports to grow 18.9% in 2026, faster than 6.5% in 2025.(amanda.lee@wsj.com)
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)
(END) Dow Jones Newswires
July 20, 2026 07:03 ET (11:03 GMT)
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