The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1111 ET - Yields on U.K. and eurozone government bonds fall as weaker-than-expected U.S. producer price index data for July reduce prospects of a Federal Reserve rate increase next month. Monthly PPI was flat in July, weaker than the 0.2% consensus forecast by economists in a WSJ poll. It's now looking "far less likely" that the Fed will feel it needs to hike interest rates as soon as September, Capital Economics' Stephen Brown says in a note. U.S. money markets price only a 35% chance of a September rate hike, LSEG data show. Ten-year gilt yields fall 2.7 basis points to last trade at 4.941%, Tradeweb data show. Ten-year German Bund yields fall 3.3 bps to 3.126%. (miriam.mukuru@wsj.com)
1057 ET - Canada's dairy farmers raise a stink over possible agricultural concessions the country's negotiators are prepared to make to the U.S. to secure tariff relief on key industrial sectors. "Our national food sovereignty is not up for negotiation," says David Wiens, head of the influential Dairy Farmers of Canada. "It is imperative that no more concessions on dairy" are made. The Trump administration is set next week to impose 50% tariffs on certain Canadian goods in response to Canada's alleged mistreatment of US dairy products, automobiles and alcohol. Canadian officials say they are unwilling to upend the country's supply-management system, whereby government agencies set dairy prices, enforce production quotas, and limit dairy imports. Canadian and US negotiators are in talks in Washington, to avoid the imposition of new 50% duties. (Paul.Vieira@wsj.com; @paulvieira)
1052 ET - Economists are now digesting this week's inflation data with the CPI and PPI prints in hand. With both reports showing a decline in annual inflation rates, some economists think this adds to the case for the Fed to stay on hold for the rest of this year. However, in today's PPI report, some economists predict the jump in portfolio management fees may add some pressure to PCE, what has been the Fed's preferred inflation measure. The BEA will change its methodology in measuring those fees in September, with economists predicting the revisions will ease pressure on future core PCE readings. (jessica.coacci@wsj.com)
1049 ET - Technology sector credit valuations look fairly attractive, CreditSights' Logan Miller says in a webinar. The sectors faces pressure due to rapidly rising debt issuance by AI-linked companies. However, tech credit selloffs present opportunities for investors to buy the assets given that valuations are likely to hold up, Miller says. (miriam.mukuru@wsj.com)
1047 ET - The dollar could fall further as recent U.S. data have reduced the prospect of the Federal Reserve raising interest rates, Rabobank's Jane Foley says in a note. Last week's weak jobs data combined with Wednesday's subdued inflation data prompted markets to trim rate-rise bets. "If Fed rate hike speculation continues to be pared back, in line with RaboResearch's view, the dollar will be exposed to potential downside pressures." However, any falls in the currency should be contained by safe haven demand while the Strait of Hormuz remains closed given America's energy exporter status, she says. The euro rises 0.1% to $1.1539 and Rabobank expects choppy range trading between $1.15-$1.16 over the next three to six months. (renae.dyer@wsj.com)
1023 ET - The low-hire, low-fire labor market is the result of slowing labor demand growth meeting slowing labor supply growth, Richmond Fed President Tom Barkin says in a speech before the Greenville Chamber of Commerce in South Carolina. Net migration to the U.S. has plummeted since 2024 and the population has continued to age, Barkin says. The share of the population aged 65 and over has grown more than 20%, and those baby boomers are largely retiring, cutting the number of individuals not in the labor force, he says. "So, while there may be fewer jobs being added, there are also fewer people looking for those jobs," Barkin says. (dean.seal@wsj.com)
1020 ET - The U.S. economy's resilience can be largely chalked up to persistent consumer spending, Richmond Fed President Tom Barkin says in a speech before the Greenville Chamber of Commerce in South Carolina. Inflation is still above target, real incomes are down and consumer sentiment just hit a multi-decade low, yet economic activity has held up, Barkin says. "Despite the turmoil, consumers have kept spending," he says. Consumers seem to have embraced a "YOLO" attitude, especially affluent consumers who have seen their wealth inflate with the stock market and rising home values, Barkin says. Many also still have their jobs, as unemployment claims recently hit a 50-year low, he says. (dean.seal@wsj.com)
1010 ET - The Fed's preferred inflation gauge is likely to keep cooling, while remaining well above the 2% target, Citi's Veronica Clark and Andrew Hollenhorst say in a note. They look at this week's CPI and PPI data to estimate July core PCE at 3.2%, down from June's 3.3%, with a risk of maintaining the same pace. They expect a 0.21% monthly increase in core PCE. The forecast, if confirmed, could keep interest rates unchanged in September. Odds of another Fed hold reach 66% following recent inflation data, up from 45% a week ago, according to CME. (paulo.trevisani@wsj.com; @ptrevisani)
1003 ET - With the CPI and PPI prints now in hand, Oxford Economics forecasts headline PCE inflation--what has been the Fed's preferred inflation measure--will rise 3.6% year-over-year for July down slightly from 3.7% in June. The PCE report is set to arrive later this month. "However, with services disinflation still in the pipeline, and a labor market that is far from overheating, we think the Federal Reserve will remain on hold for the rest of 2026," the note says.(jessica.coacci@wsj.com)
0930 ET - Cleveland Federal Reserve Bank President Beth Hammack reiterates her views that the Fed should raise interest rates to bring inflation back down to target. "I think it's really critical that we act now," Hammack says during a fireside chat with the Dayton Area Chamber of Commerce. "When I look at policy broadly, to me, it's not restrictive." Hammack is a voter this year on the Federal Open Market Committee and dissented in favor of higher rates at the last FOMC meeting.(jessica.coacci@wsj.com)
0907 ET - The Japanese yen is failing to benefit from speculation about the Bank of Japan accelerating interest-rate rises as debt sustainability concerns persist, Societe Generale's Kit Juckes says in a note. Without fiscal policy tightening along with a sharp fall in oil prices and a narrowing of the gap between short- and long-term Japanese government bond yields, another test of policymakers' willingness to intervene and defend the yen seems inevitable, he says. Lower oil prices and upward revisions to Japanese growth forecasts could support the yen later this year "but we have to get out of the current U.S./Iranian impasse first." The dollar falls 0.1% to 159.19 yen after reaching a 12-day high of 159.54 Wednesday, LSEG data show. (renae.dyer@wsj.com)
0904 ET - Richmond Fed President Tom Barkin says inflation will make it back to the central bank's 2% target, but its path to get there remains an open question. "Will the Fed need to raise rates further, or is inflation already on a path down to target?" Barkin says in a speech before the Greenville Chamber of Commerce in South Carolina. He argues that inflation was on track early last year but shot back up due to tariffs, an oil price shock and a flood of AI spending. Tariff rates have settled, the Middle East conflict is heading toward a resolution and the data center boom should ease at some point, Barkin says. But the elevated inflation seen today could be more "embedded" as supply chain challenges persist and AI continues to pull in major investments, he says.
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