The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1002 ET - The Czech koruna falls to its lowest in three weeks against the euro after the Czech National Bank kept interest rates at 3.75% The central bank said its previous rate increase "brought about the desired tightening of monetary conditions" and its main strategy now is to assess upcoming data and inflation risks. The decision to hold rates wasn't a surprise, Capital Economics economist William Jackson says in a note. Headline inflation remains below target and second-quarter growth wasn't as strong as expected, he says. Capital Economics expects the CNB could deliver two more rate rises early next year as underlying inflation is elevated. The euro rises 0.2% to a three-week high of 24.241 koruna. (renae.dyer@wsj.com)
0927 ET - U.S. interest rates could remain high due to growing demand for funding by corporates and the government, Federated Hermes' R.J. Gallo says in a note. Rising debt issuance by AI-linked companies and persistently high borrowing from the U.S. government suggest that interest rates could stay elevated to attract capital, he says. (miriam.mukuru@wsj.com)
0922 ET - Treasury yields rise after initial jobless claims come in at 199,000 versus the WSJ consensus of 204,000, suggesting a healthy labor market. Meanwhile, oil prices edge higher amid talks to reopen the Strait of Hormuz. A separate report from outplacement firm Challenger, Gray & Christmas finds that U.S.-based employers announced 33,429 job cuts in July, down 27% from cuts announced in June. The 10-year yield is at 4.65%, slightly higher than yesterday's close of 4.62%. The 2 year-yield is at 4.22%, also slightly higher than yesterday's close of 4.12%.(jessica.coacci@wsj.com)
0849 ET - Sterling's reaction to fiscal policy announcements under new Prime Minister Andy Burnham has been orderly so far but risks remain, Ebury's Matthew Ryan says in a note. Burnham's appointment of John Healy as treasury chief and his commitment to the fiscal rules is calming nerves, he says. A handful of modest tax breaks have been announced, but concerns remain over how these will be funded and whether increases to other taxes can be expected in the autumn budget, he says. The government has reduced business rates for pubs, clubs and live music venues while removing value added tax from electricity bills. Sterling trades flat at $1.3463. The euro falls 0.1% to 0.8573 pounds. (renae.dyer@wsj.com)
0800 ET - Euro investment-grade credit could lag U.S. equivalents in September due to heavy supply in the European market, Bank of America credit strategists say in a note. Companies issuer a larger share of the total new supply in the euro credit market than in the U.S. dollar credit market, they say. In addition, cash inflows into U.S. investment-grade funds have been stronger than into European investment-grade funds so far in 2026, the strategists say. (miriam.mukuru@wsj.com)
0757 ET - Eurozone retail sales declined in June, though it was a decent quarter for goods sales, Pantheon Macroeconomics economist Melanie Debono says in a note. Sales volumes were down 0.3% on the month, partly reversing the 0.4% rise in May. Fuel sales rose 1.5% on lower oil prices, though that was not enough to offset declines in both food and non-food, non-fuel sales. "It seems, still-high fuel prices are eating into consumers' spending outside of fuel," Debono says. Despite June's fall, sales were up 0.2% in the second quarter, only a touch below the 0.3% increase in the first quarter. Since then, consumer confidence has risen, though fuel prices also increased further, pointing to subdued retail-sales readings through the summer, she says. (edward.frankl@wsj.com)
0746 ET - A deal to reopen the Strait of Hormuz would be positive for the euro but not enough to materially alter the single currency's trajectory, Ebury's Matthew Ryan says in a note. This is partly because market positioning already reflects a fairly high degree of optimism around Iran war de-escalation, he says. The future of Iran's nuclear ambitions also remains far from resolved, which could contain risk appetite, he says. The European Central Bank could raise interest rates in September even if a peace deal is agreed as elevated energy prices aren't weighing the economy as heavily as anticipated yet remain an inflationary risk, he says. However, this is largely priced in. The euro falls 0.1% to $1.1540.(renae.dyer@wsj.com)
0722 ET - The dollar is undervalued against eight of the nine other G-10 currencies, suggesting some additional risk premium is priced in, MUFG Bank's Derek Halpenny says in a note. The dollar has potentially priced in the prospect of a new ceasefire deal in the Middle East conflict more quickly than other markets, he says. Another factor weighing on the dollar's performance is the joint U.S.-Japan intervention to strengthen the yen last week. Moreover, the WSJ reports that President Trump has spoken to Federal Reserve Chair Kevin Warsh repeatedly. This reinforces the impression of greater political influence undermining Fed independence, he says. The DXY dollar index rises 0.1% to 99.784 but remains near a seven-week low of 99.413 reached Monday. (renae.dyer@wsj.com)
0636 ET - The prospect of the Bank of England avoiding interest-rate rises this year remains a persistent sterling headwind, Monex Europe analysts say in a note. Soft underlying economic activity could prompt the BOE to keep rates at 3.75% through year-end, which might weaken sterling, they say. In the meantime, sterling remains "at the mercy of the dollar and broader risk appetite before tomorrow's U.S. [nonfarm] payrolls report." Sterling falls 0.1% to $1.3461. The euro falls 0.1% to 0.8572 pounds. (renae.dyer@wsj.com)
0625 ET - The cost of insuring euro-denominated credit against default remains steady as focus is on potential U.S.-Iran talks. There is "growing optimism that the United States and Iran could reach a peace deal allowing the Strait of Hormuz to reopen," ActivTrades' Ricardo Evangelista says in a note. The iTraxx Europe Main index of euro investment-grade credit default swaps is unchanged at 51 basis points, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0603 ET - China's industrial production growth likely eased to 4.7% from a year earlier in July, from 5.3% in June, according to BofA Securities economists in a research note. The official manufacturing PMI production subindex fell below 50, they point out. This reflects weaker orders, seasonal softness and weather-related disruptions, they note. Still, supply continued to outperform demand, thanks to resilient high-tech and equipment manufacturing, they note. (tracy.qu@wsj.com)
0553 ET - The U.S.'s 12.5% tariff on some of Singapore's exports isn't likely to weigh heavily on the Southeast Asian country's economy, says Maybank economist Brian Lee in an email. About a third of the city-state's domestic exports to the U.S. are subjected to the forced-labor tariffs, which Singapore Deputy Prime Minister Gan Kim Yong said would affect around 9.5 billion Singapore dollars of shipments annually. Lee said the exemptions to the new tariffs are broadly maintained compared with the previous U.S. tariffs, but the effective tariff-rate increase is smaller as it affects a narrower range of goods despite the 2.5 percentage-point increase, he adds. Singapore also has well-diversified export destinations, with demand from other markets such as China expected to remain strong, he says.
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