The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0711 GMT - Eurozone government bond yields fall, tracking moves in U.S. Treasury yields, as oil prices decline after U.S. President Trump said diplomatic talks with Iran would resume. Trump told reporters Sunday that the U.S. would engage in talks beginning Monday afternoon. Still, the situation is the Middle East remains uncertain. "On geopolitics, we are still not comfortable that we are out of the woods," Jefferies' Mohit Kumar says in a note. The 10-year German Bund yield falls 4.7 basis points to 3.155%, according to LSEG. (emese.bartha@wsj.com)
0653 GMT - Operating conditions in Indonesia's manufacturing economy improved at the start of 3Q, the latest S&P Global data suggests. Headline manufacturing purchasing managers index was at 50.2 in July, up from June's 46.9.The latest reading indicates a renewed upturn in output volumes in the Indonesian manufacturing sector, partly due to the stabilization of new order intakes, says Usamah Bhatti, an economist at S&P Global Market Intelligence. The slight improvement in overall conditions also encouraged firms to raise staffing numbers for the first time in five months, S&P says.(amanda.lee@wsj.com)
0649 GMT - The dollar falls, staying near a seven-week low reached overnight after President Trump said he cancelled a planned strike on Iran while Japan and the U.S. confirmed joint intervention to shore up the yen. Trump said in a Truth Social post that Iran and other Middle Eastern countries had asked the U.S. not to attack as the "perimeters of a deal has been agreed to." Japan's Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent both confirmed joint interventions to support the yen last week. The DXY dollar index falls 0.2% to 99.739 after reaching a low of 99.418 overnight. The dollar falls 0.6% to 156.60 yen after hitting a three-month low of 155.21 overnight, according to LSEG.(renae.dyer@wsj.com)
0620 GMT - There were some tentative signs of renewed vigor in Australia's property auction market last week, but overall, conditions remain soft, says property research group Cotality. The preliminary auction clearance rate rose 1.1 percentage points last week to 53.6%, continuing a trend of improvement from the June low of 47.4%, it says. It was the highest preliminary clearance rate in three weeks, though the tenth in a row where the rate held below 55%. Nationally, 1,273 auctions were held, down 10% week on week and 19.2% lower than at the same time last year, Cotality adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0548 GMT - German 10-year Bund yields could rise further, according to Societe Generale rates strategists who, therefore, maintain shorts on them. In their baseline scenario, they expect the 10-year Bund yield at 3.25% for the fourth quarter of 2026 and 3.40% for mid-2027. The 10-year Bund yield closed at 3.204% on Friday, according to LSEG. (emese.bartha@wsj.com)
0545 GMT - Japanese investors are buying fewer foreign bonds, a trend reinforced by historically high Japanese government bond yields and government measures to promote domestic ownership, Societe Generale rates strategists say in a note. The high cost of hedging foreign bonds can be mitigated by preferring cross-currency bond hedges over FX hedges, they say. On this metric, Italian and French bonds, or BTPs and OATs, respectively, offer the best risk-adjusted pickup, while long-end eurozone government bonds are the most attractive in terms of outright yield and carry protection, the strategists say. "But with the risk of Bank of Japan [interest rate] hikes, even two- to five-year eurozone EGBs could find some appeal," the strategists say. (emese.bartha@wsj.com)
0530 GMT - U.S. Treasury yields slide in Asian trade as oil prices fall on improved outlook for a solution in the Middle East. After days of threats to launch a new offensive against Iran, U.S. President Trump is prioritizing diplomacy and has said new talks with Iran will begin on Monday. Brent oil is down 7.65% at $83.23 per barrel, leading to a 4-6 basis point fall in Treasury yields across maturities. The 10-year yield is down 5.3 basis points to 4.690%, while the 30-year yield is down 4 basis points to 5.235%, according to Tradeweb. (emese.bartha@wsj.com)
0529 GMT - FX intervention alone is unlikely to reverse weakness in the Japanese yen on a sustained basis as wide U.S.-Japan rate differential remains a key driver, says Mahjabeen Zaman, head of FX research at ANZ.Unless the Bank of Japan normalises policy more quickly than expected or U.S. yields fall meaningfully, a durable yen rally is unlikely, she says. ANZ is retaining its year-end forecast for the U.S. dollar at 156 yen amid higher oil prices and Japan's persistent budget deficits, she says. The forecast also reflects the Bank of Japanese more hawkish bias in its recent policy meeting, she adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0528 GMT - Several rounds of FX intervention since Thursday offer the yen short-term relief, RBC Capital Markets' Abbas Keshvani says in an email. "Current intervention is bolder," the director of Asia Macro Strategy says. "This latest episode of intervention is larger in size and more coordinated than the others," the director says. The effects "should last longer than the April/May intervention, which the market faded within a month," Keshvani says. The director notes suspected FX intervention today, coordinated U.S.-Japan FX intervention on Friday, and solo Japan intervention on Thursday. The dollar is 0.7% lower at 156.48 yen, LSEG data show. (ronnie.harui@wsj.com)
0527 GMT - There isn't any reliable evidence that political influence may have played any role in the Federal Reserve's most recent interest-rate decision, LBBW's Elmar Voelker says in a note. Rather, macroeconomic data from recent weeks created room to maintain a wait-and-see stance for the time being, the senior fixed-income analyst says. Among the data, Voelker refers most notably to the unexpectedly sharp decline in June inflation. "However, it seems to us that investors are now, to some extent, taking back the premature praise they had bestowed on [Fed Chairman Kevin] Mr. Warsh for his self-declared independence," he says. As a result, yields on very long-term U.S. Treasury securities rose post-FOMC, according to Voelker. The outcome is an additional push toward steepening the U.S. yield curve, he says. (emese.bartha@wsj.com)
0520 GMT - J.P.Morgan is pulling forward its expectations for a Federal Reserve rate hike to December this year from the second half of 2027, with policy rates on hold at 3.75%-4.00% thereafter, its strategists say in a note. In line with that, they raise their forecasts for the year-end level of 10- and 30-year Treasury yields. They now forecast the 10-year yield at 4.85% at the end of 2026 versus 4.70% previously. They also raise the 30-year target to 5.40% from 5.20%. The strategists see room for further steepening over the near term, driven by rising inflation expectations and a rising term premium. The 10-year Treasury yield is trading at 4.693% and the 30-year yield is at 5.236%, according to Tradeweb. (emese.bartha@wsj.com)
0515 GMT - The U.S. Treasury is set to uphold a regular and predictable issuance strategy, leaning on Treasury bill issuance to delay coupon [Treasury note and bond issuance] increases until at least February 2027, Morgan Stanley strategists say in a note. "Healthy market functioning and resilient demand suggest investors should focus less on headline deficits and more on issuance composition," they say. They expect the Treasury to keep coupon note and bond issuance stable until February 2027, adopting smaller increases, spread out over a longer period, they say. The Treasury's quarterly refunding announcement with borrowing estimates are scheduled for Monday and the refunding policy statement and auction details are due on Wednesday.
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