The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
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. (dean.seal@wsj.com)
0859 ET - Treasury yields edge lower as U.S. data support the case for another hold, rather than a hike, by the Fed. Wholesale inflation is slower than expected, with July PPI flat versus the +0.2% WSJ consensus forecast. Weekly jobless claims rise to 209,000 from an upwardly revised 200,000, while economists surveyed by WSJ forecast 204,000. The numbers come on top of a moderate July CPI, backing up the notion that the Fed could hold again in September. The yield decline intensifies after the data. The 10-year is at 4.661%, down from yesterday's settle of 4.682%. The two-year falls to 4.165% from 4.198%. (paulo.trevisani@wsj.com; @ptrevisani)
0859 ET - U.S. technology sector credit could continue facing headwinds over the coming years due to rising debt issuance, CreditSights' Logan Miller says in a webinar. U.S. investment-grade tech sector credit supply so far this year is at a record level driven by hyperscalers' debt issuance, Millers says. Hyperscalers are large technology companies that manage data centers and provide advanced computing services. Heavy debt supply is contributing to higher corporate yields and sovereign yields, he says. Valuations on tech sector credit, nonetheless, look relatively attractive given the underlying corporate financial positions and credit metrics, Miller says. (miriam.mukuru@wsj.com)
0815 ET - The Norwegian krone's losses are likely to be limited as the Norges Bank has kept another interest-rate rise firmly in play, Monex Europe's Barry van der Laan says in a note. The Norges Bank left rates at 4.25% Thursday as expected but stressed inflation remains too high and another rate increase might still be required. "We continue to see a September hike as a likely option rather than a certainty, with incoming inflation, wage data, and fresh forecasts now key," van der Laan says. Any renewed evidence of persistent inflation could rebuild expectations for a September rate rise and lift the krone, he says. The euro rises 0.3% to 10.9748 krone as oil prices fall. (renae.dyer@wsj.com)
0805 ET - The Turkish lira is likely to weaken significantly further by the end of the year, Commerzbank's Tatha Ghose says in a note. "Turkey's reliance on energy imports and its deep trade and financial linkages to the Middle East create a problematic situation and exacerbating pre-existing balance of payments vulnerabilities." The central bank might soon have to resume cutting interest rates due to political pressure even though inflation remains elevated and at risk of rising given the energy price shock and expected food-price spike due to drought, he says. The dollar trades steady at 47.7703 lira, near the record high of 47.7791 reached earlier, LSEG data show. Commerzbank expects it to reach 53.000 by December. (renae.dyer@wsj.com)
0734 ET - The Federal Reserve could leave interest rates unchanged for the remainder of 2026 and in the first half of 2027, CreditSights' Logan Miller says in a webinar. The U.S. annual headline inflation slowed down to 3.4% in July from 3.5% in June. Recently released jobs data also showed deceleration in wage growth and weak nonfarm payroll numbers. These data raise the possibility of the Fed keeping rates on hold in September, Miller says. Uncertainty around the U.S. labor market is sufficient to keep the Fed on hold over the coming months, he says. Investors price in one quarter-point Fed rate increase in 2026, LSEG data show.
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