The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
2052 ET - Bank of Japan policymakers likely see room for further interest-rate hikes, supporting market expectations for a December move, according to the minutes of the September meeting. One board member noted that corporate feedback showed past hikes and potential near-term increases had limited impact, with hardly any firms scaling back capital spending over borrowing costs. Another member said recent stock gains and yen weakness had made financial conditions even more accommodative for businesses. With inflation persisting, many economists expect the terminal rate to exceed 1.75%. (megumi.fujikawa@wsj.com)
2000 ET - Cryptocurrencies are broadly higher in morning Asian trade, with Bitcoin staying above the psychological $80,000 mark as markets digest Democrats winning the House and the Senate in the U.S. midterm elections. Bitcoin fell sharply before reaching its cycle low after each of the past three midterms, but this time, much of the decline came before the vote, Glassnode analysts say. Over the longer term, the industry will have to adjust to a Democratic Congress, though it is worth noting that Bitcoin is now far more embedded in the traditional financial system than in past cycles, Glassnode says. Banks, asset managers and ETFs are invested, making a change in Washington less of a threat than it would have been a few years ago. Bitcoin is up 0.7% at $80,704.(fabiana.negrinochoa@wsj.com)
1954 ET - The Bank of Japan's September meeting minutes could fuel expectations for another interest-rate hike by year's end as the document shows growing concern over inflation risks. Many BOJ board members pointed to an increasing possibility that consumer inflation would pick up from early autumn, noting that cost pressures were spilling over into consumer goods and that price hikes were scheduled for a larger number of food and beverage items than in typical years, according to the minutes from the meeting, when the central bank raised rates to 1.25%. The overnight index swaps market is currently pricing in nearly an 80% chance of a December rate hike. (megumi.fujikawa@wsj.com)
1925 ET - Asian currencies are mixed against the dollar in early trade, but may be supported by mild appetite for risk assets. Oil futures fell overnight as the Democrats won control of the U.S. Congress, raising hopes for a settlement to the Middle East conflict. For Asian economies, falling oil prices would be particularly beneficial to net energy importers, including India, Japan, South Korea and Thailand, Commerzbank Research analysts say in a note. "This will manifest through lower import bills, reduced inflationary pressures, and improved current-account positions," they add. The U.S. dollar is 0.1% lower at 158.30 yen, but little changed at 1341.40 won, LSEG data show.(amanda.lee@wsj.com)
1919 ET - Japanese stocks are higher after the Democratic sweep of U.S. Congress boosted expectations for a quick end to the Iran conflict, leading to sharply lower oil prices overnight. Auto, pharmaceutical and real estate stocks are leading gains. Toyota Motor is up 7.5%, Astellas Pharma is 9.5% higher and Sumitomo Realty & Development is up 7.2%. The dollar is at 158.41 yen, compared with Y158.17 as of Wednesday's Tokyo stock market close. Investors are closely watching crude oil prices and domestic earnings. Toyota is set to release its quarterly earnings later Thursday. The Nikkei Stock Average is up 0.7% at 62644.86. (kosaku.narioka@wsj.com; @kosakunarioka)
1902 ET - Long-term Japanese government bond yields are lower after the Democratic sweep of the U.S. Congress raised expectations for a quick end to the Middle East conflict. Sharply lower oil prices are easing concerns about higher prices of energy and other related products. Investors are focusing on any shifts in U.S. policy on the Middle East and crude oil prices. The 10-year JGB yield is down 2 basis points at 2.790%. (kosaku.narioka@wsj.com; @kosakunarioka)
1844 ET - Japanese stocks may rise after the Democratic sweep of the U.S. Congress raised hopes for a quick resolution to the Middle East conflict, sending oil sharply lower. Nikkei futures are up 1.2% at 63195 on the SGX. The dollar is at 158.39 yen, compared with Y158.17 as of Wednesday's Tokyo stock market close. Investors are focusing on crude oil prices and domestic corporate earnings. Toyota Motor is scheduled to announce its quarterly results later on Thursday. The Nikkei Stock Average fell 1.4% to 62188.63 on Wednesday. (kosaku.narioka@wsj.com)
1643 ET - The Australian dollar has climbed back above 70 U.S. cents in the wake of the Democratic sweep of both chambers of the U.S. Congress. Optimism around a quicker end to the Iran conflict issupporting the risk sensitive Aussie, says Carol Kong, currency strategist at CBA. Deputy Governor of the Reserve Bank of Australia Andrew Hauser speaks at 0635 GMT on policy matters, with part of the speech also likely to be spent justifying why the bank raised the cash rate earlier in the week. The pair now trades at 70.16 U.S. cents.(james.glynn@wsj.com; @JamesGlynnWSJ)
1553 ET - CIBC Capital Markets identifies three candidates who are contenders to succeed Bank of Canada Gov. Tiff Macklem should Macklem depart as scheduled in June, 2027. CIBC's fixed-income team notes that since the BOC adopted inflation targeting in the early 1990s, no governor has stayed on for more than one seven-year term. CIBC's top 3 candidates are Jean Boivin, a former senior BOC and Canadian government official and now head of a BlackRock-affiliated think tank. Boivin worked under current Canada PM Mark Carney when at the BOC. Also in play, CIBC adds, are Carolyn Wilkins, the former No. 2 at the BOC until 2020; and Paul Beaudry, another former senior BOC officials and economics professor at the University of British Columbia. (paul.vieira@wsj.com; @paulvieira)
1545 ET - Treasury yields fall as the Democratic sweep stokes hopes of an end to the Iran war and oil prices plunge 8%. Vice-President J.D. Vance says on social media the war is to blame for the Republican loss, fueling bets on an imminent resolution. Meanwhile, the Treasury keeps auction sizes unchanged for the coming months while projecting continuing $6 billion buyback operations for long-term bonds. ADP reports higher-than-expected private-sector job creation in October, ahead of Friday's payrolls. The 10-year yield declines 0.060 percentage point to 4.891%, while the two-year falls 0.033 point to 4.579%. Both benchmarks settle at their lowest level in nearly two months. (paulo.trevisani@wsj.com; @ptrevisani)
1349 ET - Energy affordability featured heavily in the U.S. midterm elections, and energy may be one of the few areas where compromise between both parties remains possible, PwC says in a note. With control of both the House and the Senate, Democrats will be better able to set hearing agendas, issue subpoenas, and shape appropriations, which could pressure agencies and regulated sectors to focus more on clean energy, transmission, storage, grid modernization, and consumer cost protections, the firm says. "Both parties have an interest in prioritizing affordability and reliability even as they continue to differ on how to expand capacity and modernize the grid system." (anthony.harrup@wsj.com)
1127 ET - The Democrats' blue tidal wave to reclaim Congress will blunt the pace of the AI infrastructure buildout, Dan Ives says in a Yorkville Ives research note. The takeover of both chambers, especially the Senate, will create major hurdles for AI and tech legislation in Washington over the next two years, Ives says. Trump will probably veto any major AI safety or regulatory laws, but this will still force the tech industry to the negotiating table to create compromises with lawmakers, he says. The results in Texas are particularly worrying for AI bulls, where Democrat Gina Hinojosa, who is known to be against data centers, upset Greg Abbott in the governor's race, Ives says.
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