The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0823 GMT - The dollar is at risk of falling given the lack of confidence in how the Federal Reserve will respond to the energy-price shock driven by the Middle East conflict, MUFG Bank's Derek Halpenny says in a note. Fed Chairman Kevin Warsh has failed to provide any clear signals about potential interest-rate rises as he refrains from forward guidance. Concerns that the Fed could keep rates on hold despite underlying inflation remaining elevated is causing a steepening of the Treasury yield curve where the gap between long-term and short-term yields widens as long-term yields stay elevated, Halpenny says. The DXY dollar index rises 0.1% to 99.895. The 10-year Treasury yield rises to an 11-day high of 4.7354%, LSEG data show. (renae.dyer@wsj.com)
0801 GMT - China's property sector is likely in a "gradual fundamental recovery even without substantial incremental stimulus," according to HSBC analysts in a research note. Beijing rolled out relaxations on home-purchase restrictions earlier this month, they point out. This is in line with HSBC's expectations that local governments are likely to deploy "modest easing measures to sustain sales momentum," they say. "Policy, in our view, is increasingly serving as a safeguarding rather than a stimulus role, stabilizing price expectations and anchoring homebuyer sentiment," they say. HSBC prefers China Resources Land and C&D International Investment for their leading position in high-end projects and stronger earnings visibility. (tracy.qu@wsj.com)
0750 GMT - Realized volatility in the euro versus the dollar is likely to remain low in the near term, ING's Chris Turner says in a note. "It is hard to see that environment changing anytime soon--or at least until mid-September when central bankers around the world return from their summer breaks." The euro is unlikely to trade much outside a range of $1.1515 to $1.1560 Tuesday, he says. The euro falls 0.1% to $1.1533. (renae.dyer@wsj.com)
0738 GMT - Singapore's strong 1H economic performance and the likely persistence of a global artificial-intelligence boom prompts DBS to upgrade the country's 2026 GDP growth forecast to 5.0% from 4.3%. The manufacturing and wholesale trade sectors were the best performers in 2Q, says DBS senior economist Chua Han Teng in a report. Trade-related sectors' growth outlook remains favorable over the coming months, given the continuous firm demand for AI-related hardware. U.S. hyperscalers continue to signal substantial AI infrastructure investment, Chua says. "This should continue to underpin external demand for Singapore's electronics and precision engineering exports, including memory chips, server-related products and semiconductor equipment," he adds.(amanda.lee@wsj.com)
0718 GMT - Yields on U.K. government bonds, or gilts, advance due to inflation concerns as oil prices stay elevated. The lack of a near-term solution to the Middle East conflict is driving up oil prices and raising concerns that inflation could force central banks to raise interest rates in the coming months. Ten-year gilt yields climb 4.4 basis points to 5.024%, the highest level since July 31, Tradeweb data show. (miriam.mukuru@wsj.com)
0717 GMT - Comex gold futures' bullish setup remains intact, based on a daily chart, RHB Retail Research's Joseph Chai says in a report. The relative strength index continued moving upward, reaffirming bullish momentum is in play, the analyst notes. The precious metal will probably see follow-through upward momentum to break beyond resistance at $4,400 per ounce, Chai says. At this juncture, both the 20- and 50-day simple moving averages are serving as support levels, the analyst adds. Spot gold is 0.6% lower at $4,363.44 per ounce. (ronnie.harui@wsj.com)
0717 GMT - Bitcoin falls as hopes for a reopening of the Strait of Hormuz fade, causing investors to shun risky assets. President Trump said he would seek reparations for the Iran war after Tehran made its own demands for compensation as part of its conditions for reopening the strait. The impasse lifts oil prices and boosts expectations for interest-rate rises by the Federal Reserve, hitting risk sentiment. The oil-price rally is making markets anxious ahead of Wednesday's U.S. inflation data, Tickmill Group's Patrick Munnelly says in a note. Bitcoin falls 0.3% to $63,933, LSEG data show. (renae.dyer@wsj.com)
0703 GMT - Singapore's economy still faces risks despite its strong 1H performance, says RHB Bank's group chief economist Barnabas Gan in a report. Economic activity has remained resilient, partly due to robust export performance amid external headwinds. The electronics and precision engineering segments should continue to boost Singapore's manufacturing growth for the rest of the year. However, global geopolitical developments and the risk of a sharper-than-expected correction in artificial intelligence-related investment could weaken global demand for semiconductors, memory chips and server-related products. This would weigh on Singapore's electronics exports, industrial production and its overall economic growth given its role in the global semiconductor value chain.(amanda.lee@wsj.com)
0701 GMT - The yields on eurozone government bonds are higher due to inflation concerns, as prospects of a near-term resolution to the U.S.-Iran war fade. The U.S. has decided to put economic pressure on Iran through financial sanctions and a blockade of Iranian ports in an attempt to force Iran to reach a deal with the U.S. The lack of progress in the U.S.-Iran negotiations is causing inflation fears and pushing up sovereign bond yields. Ten-year Bund yields climb 2.3 bps to 3.198%, Tradeweb data show. Ten-year French government bond yields rise 3.4 bps to 4.009%. (miriam.mukuru@wsj.com)
0652 GMT - Treasury yields rise while the dollar trades steady as negotiations to reopen the Strait of Hormuz appear to have stalled, lifting oil prices. President Trump said he will demand war reparations from Iran after Tehran called for compensation for the destruction caused by the conflict. Markets are pricing an increased chance that the Federal Reserve will raise interest rates in September in response to higher oil prices with LSEG data showing the probability back above 50% after being scaled back briefly following Friday's weaker-than-expected U.S. nonfarm payrolls report. The 10-year Treasury yield is up 2.3 basis points at 4.721%, Tradeweb data show. The DXY dollar index is flat at 99.834 with investors cautious ahead of Wednesday's U.S. inflation data.(renae.dyer@wsj.com)
0609 GMT - Reserve Bank of Australia Governor Michele Bullock has sent a number of hawkish signals at her press conference following the central bank's decision to keep rate on hold. Most notably she says that its "quite possible" that interest rates will need to rise further, while also highlighting the potential for ongoing supply shocks to the economy. The comments support the view that the RBA is well short of feeling relaxed about inflation, even after a unanimous decision by the board to sit pat. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)
0536 GMT - The Reserve Bank of Australia's revised economic forecasts suggest the central bank is nearing a level of comfort about policy settings. The unemployment rate path has been revised higher. The RBA now expects it to reach 4.5% by December, up from 4.3%. The biggest changes are on inflation. Headline CPI is now expected at 3.6% by December, down from 4.0% previously. Trimmed mean inflation has been revised lower to 3.3% by December from 3.5%, and is projected to reach 2.4% by June 2028. The direction of all these indicators suggests the RBA is near the end of its tightening cycle.
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