The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0707 GMT - Japan will likely leverage U.S. influence at the coming Group of 20 industrial and developing nations' meeting to rein in the yen's slide past 160 a dollar, says Nomura Research Institute economist Takahide Kiuchi. Japanese officials may reiterate close alignment with U.S. Treasury Secretary Scott Bessent on currency stability to hint at further joint interventions, he says. "Japan and the U.S. share a common interest in halting dollar strength and yen weakness," Kiuchi says. Both nations are poised to use the G-20 platform to keep currency volatility in check, he adds. The dollar was last trading around 159.85 yen. (megumi.fujikawa@wsj.com)
0706 GMT - Any rise in the U.S. dollar could be limited, Commerzbank's Thu Lan Nguyen says in a note. The dollar edges lower Monday following strong gains on Friday after Federal Reserve Chairman Kevin Warsh hinted at a possible rate rise due to inflation concerns. A September rate rise is "by no means a done deal," Nguyen says. "I would be cautious about jumping on the dollar euphoria too quickly." Ahead of September's meeting will be Friday's U.S. jobs data, where another weak figure could "trigger a significant [dollar] correction." Inflation figures are also due next week. Inflation data recently "have hardly been a cause for alarm," she says. The DXY dollar index falls 0.1% to 99.619, having hit a two-week high of 99.726 on Friday. (jessica.fleetham@wsj.com)
0635 GMT - Nordic markets are seen opening slightly lower, with IG calling the OMXS30 down 0.4% to 3318. "The week begins with a suppressed risk appetite in Asia due to the fact that the U.S. and Iran have once again directed military attacks against each other," SEB's Dana Malas writes. Fed Chairman Kevin Warsh's speech in Jackson Hole on Friday also signaled disappointment that inflation remains above the 2.0% target and a risk that interest rates could rise, she says. The market now prices a roughly 60% probability of a rate increase on September 16. September could be an important month, with the European Central Bank and Bank of Japan expected to raise rates, Malas adds. OMXS30 closed at 3331.27, OMXN40 at 2733.09 and OBX at 2024.48. (dominic.chopping@wsj.com)
0629 GMT - After Fed Chairman Kevin Warsh's Jackson Hole speech on Friday, expectations for a 25bp interest-rate increase in September jumped from below 40% to above 60%. The U.S. dollar also gained and the U.S. 2-year yield, which best captures Fed expectations, advanced 15 bps, flirting with July-high levels. While the market reaction was strong, Warsh has yet to fully regain his credibility, says Ipek Ozkardeskaya, senior analyst at Swissquote. "He must walk the talk--and, at times, do things that would displease the White House," she adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0629 GMT - U.S. Treasury Secretary Scott Bessent may pressure Japan to maintain cautious fiscal discipline and call for Bank of Japan interest-rate increases at a coming G-20 meeting, says Takahide Kiuchi of Nomura Research Institute. He is likely to push for that to mitigate yen-weakening risks, in exchange for coordinated interventions, the economist writes in a note. "Curbing yen weakness helps correct dollar strength and contributes to reducing the U.S. trade deficit," Kiuchi says. The recent rise in JGB yields also threatens to spill over into U.S. markets and disrupt U.S. economic and financial stability, making yen defense a benefit to the U.S. as well, he adds. The dollar was last at 159.82 yen. (megumi.fujikawa@wsj.com)
0619 GMT - China's economic momentum is likely to improve for the remainder of 2026, Capital Economics' Nguyen Hoang Nam says in a note. China's official manufacturing purchasing managers index in August rose to 49.8 from 49.2 in July, beating expectations. The subindex for total new orders increased to 50.6, up from 48.5 in July. This suggests that fiscal spending on infrastructure may be on the cusp of picking up again after delays in the deployment of already-allocated funds by local governments, says the China economist.(amanda.lee@wsj.com)
0618 GMT - The U.S. dollar eases, trimming gains it made Friday after Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole symposium. Warsh addressed the necessity to work more to bring inflation back to the Fed's 2% target and hinted at a possible rate hike if necessary. "Fed Chairman Kevin Warsh's Jackson Hole speech was the clear market mover," BNY's Geoff Yu says in a note. "His more hawkish tone drove the market to reprice the probability of a September hike from roughly one-in-three to greater than 50/50, and nearly one and a half cumulative hikes by year end," the senior EMEA macro strategist says. The DXY dollar index falls 0.1% to 99.622, having hit a two-week high of 99.726 on Friday. (emese.bartha@wsj.com)
0554 GMT - Investors see a high probability of a Federal Reserve interest-rate hike in September following Chairman Kevin Warsh's speech at Jackson Hole last Friday. Money markets currently price a 60% probability of a hike on Sept. 16, according to LSEG data. Expectations of a hike jumped immediately after Warsh's speech, initially to around 48% and later in the session to around 57%, from around 35% on Friday morning. (emese.bartha@wsj.com)
0546 GMT - Federal Reserve Chairman Kevin Warsh "was successful in re-establishing confidence," Catalyst Funds' Larry Holzenthaler says after Warsh's speech at the Kansas City Fed's annual Jackson Hole symposium on Friday. "He came across as very focused on inflation and bringing it back in line with the Fed's 2% target," the senior portfolio manager says. The market seems to be reacting exactly the way the Fed wants; short-term rates are higher, while long-term rates are marginally lower following his comments, Holzenthaler adds. "Investors should clearly expect that the Fed is going to raise rates if it needs to." (emese.bartha@wsj.com)
0541 GMT - Fed Chair Warsh's message in Jackson Hole was that "markets, not the Fed, should be doing the forecasting, and investors waiting for a pre-committed reaction function will be waiting through his entire term," says CIFC Asset Management's Natalia Lojevsky in a note. Front-end rates remain the primary tool in Warsh's framework, with the balance sheet and other crisis-era measures held in reserve rather than treated as standing policy, the managing director says. Warsh, however, gave the hawks real material too. "Inflation remains persistently above target in his own account, and he left the door open to moving on it." The market's reaction, with short-end yields rising and long yields easing, was "a classic bear-flattener as investors priced a firmer near-term path without losing confidence in the long-run inflation story."(emese.bartha@wsj.com)
0525 GMT - U.S. Treasury yields edge lower in Asian trade, trimming some of Friday's massive rises in short-end yields following Federal Reserve Chairman Kevin Warsh's hawkish speech in Jackson Hole. "Chair Warsh struck a broadly bullish tone on growth while emphasizing inflation as the Fed's primary concern," TD Securities' strategists say in a note. However, he stopped short of signaling a September hike and TD Securities' base case remains for the Fed to stay on hold, they say. The two-year Treasury yield falls 2 basis points to 4.328%, while the 10-year Treasury yield falls declines 0.8 basis points to 4.713%, according to Tradeweb. (emese.bartha@wsj.com)
0515 GMT - Inflation framing was the centrepiece of Federal Reserve Chairman Kevin Warsh's speech, referenced several times in the context of the work still to do and adherence to the 2% price target, Impax Asset Management's Ross Pamphilon says in a note. "We expect a much quieter Fed with a belief that forward guidance is ill-suited to normal times," the fixed income CIO says. While Warsh gave no direct signal for September, "this speech does increase the odds of a hike," Pamphilon says. Overall, the speech was clearly hawkish and led to a flattening of the curve, with the front end selling off. "The speech left zero doubt with respect to the inflation focus."
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