The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0529 GMT - The bar for a further selloff in eurozone front-end government bonds is high, as market expectations of more than two further 25-basis-point rate hikes by the European Central Bank over the next 12 months are already priced in, Mediolanum International Funds' Niall Scanlon says in a note. "The front end has already repriced materially on the renewed inflation risk," the fixed-income portfolio manager says. The main risk to that view is a governing council that leans harder on gas-driven inflation than Mediolanum anticipates, Scanlon says. At this week's meeting, Mediolanum expects ECB President Christine Lagarde to reaffirm the commitment to the 2% target and flag upside inflation risks from energy, while stopping short of fully endorsing the additional tightening the market has priced. (emese.bartha@wsj.com)
0526 GMT - The recent volatility in inflation leading economic indicators (LEIs) is poised to push up stock-bond correlations, continuing a macro environment where bonds are less effective as equity diversifiers, Variant Perception says in a note. Variant's leading indicator for stock-bond correlations is ticking higher again, signaling positive expected correlations ahead, it says. "This has been driven by rising volatility of our inflation LEI," it says. More frequent inflation shocks tend to restrict central bank policy flexibility, resulting in slower policy responses to negative shocks and driving up stock-bond correlations, it adds. (emese.bartha@wsj.com)
0514 GMT - Speculation about Federal Reserve interest rate hikes is justified, DZ Bank analyst Christian Lenk says in a note. However, partly due to the latest inflation figures, which came in below analyst expectations in June, "this does not necessarily mean the Fed hikes," he says. Speculation regarding the key interest rates is also being reflected to some extent at the long end of the U.S. Treasury curve, albeit to a much lesser extent than at the front end, Lenk says. DZ Bank continues to expect volatility in 10-year U.S. Treasurys to remain moderate and expects the 10-year U.S. Treasury yield to drift lower to 4.40% on a 12-month horizon. The 10-year Treasury yield declines 0.4 basis points to 4.593%, according to Tradeweb. (emese.bartha@wsj.com)
(END) Dow Jones Newswires
July 21, 2026 01:29 ET (05:29 GMT)
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