The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0836 GMT - The Norwegian krone could rise if the Norges Bank keeps interest rates unchanged in a decision at 0900 GMT but signals a rate increase in December, Commerzbank's Antje Praefcke says in a note. The Norges Bank raised rates in September, affording it time to wait for data before taking action again, but should keep the door open to lifting rates as soon as December, she says. This should boost the krone as the market is "far from convinced" about a December move. "More broadly, however, the krone remains primarily driven by oil and gas prices." The euro trades flat at 10.4469 krone after rising to a 10-day high of 10.4784 earlier on lower oil prices, according to LSEG. (renae.dyer@wsj.com)
0834 GMT - Asia's key risks remain largely unchanged following U.S. midterm elections, according to UOB economists in a research note. Trade, tariffs, sanctions and foreign policy authority continue to reside with the executive branch, they say. "Tariff risks for Asian exporters persist despite Democratic control of Congress," the bank says. Congressional oversight of the U.S.-Iran conflict may increase, but support for a firm stance on China suggests limited changes to broader U.S.-China strategic competition, UOB says. (tracy.qu@wsj.com)
0833 GMT - Near-term concerns over an economic slowdown have been eased by Indonesia's stronger-than-expected 3Q growth, but the momentum may prove difficult to sustain into 2027, UOB economist Enrico Tanuwidjaja says in a note. Household spending remains moderate, while recent growth was partly supported by front-loaded government spending and strong investment, which could ease, he says. Slower growth among key trading partners, uncertainty over global trade policies and subdued commodity prices may also weigh on exports, he reckons. UOB raises its 2026 growth forecast to 5.4% from 5.2%, assuming growth moderates to 5.2% in 4Q, but keeps its 2027 forecast unchanged at 5.3%. (yingxian.wong@wsj.com)
0819 GMT - The Bank of England is unlikely to raise interest rates rapidly over the coming months, although a quarter-point rate rise is widely expected at its upcoming decision at 1200 GMT, Ebury's Matthew Ryan says in a note. Investors have slightly cut back their expectations of BOE rate hikes as oil prices retreat, to 94bps by the end of 2027, down from 105bps priced in at the start of the week, LSEG data show. The drop in oil prices is likely to alleviate pressure on the BOE to act, Ryan says. "We expect the BOE to deliver a 25 basis-point hike on Thursday, but we do not think the MPC will endorse market pricing for further tightening in 2027." (miriam.mukuru@wsj.com)
0813 GMT - Gold futures rose to a two-week high in early European trading, supported by a weaker dollar and declining Treasury yields after the Democratic sweep of Congress in the U.S. midterm elections raised expectations of tighter fiscal discipline. New York futures climb 1.5% to $4,132.50 a troy ounce, with falling oil prices also lending support. Despite the rebound, the near-term outlook for the precious metal remains challenging. "Inflation concerns continue to support expectations for tighter monetary policy," analysts at ING say. "But much depends on developments in the Middle East and what they mean for energy markets." Meanwhile, silver futures rise 0.4% to $52.52 an ounce, while platinum is up 1.3% to $1,517.10 an ounce.(giulia.petroni@wsj.com)
0810 GMT - Sterling trades steady against the dollar and falls slightly versus the euro as investors await the Bank of England's policy decision at 1200 GMT. With markets pricing a 98% chance of the BOE raising interest rates by 25 basis points to 4.0%, according to LSEG, the focus is on the vote split and any signals about future tightening. Ahead of the decision, oil prices have fallen markedly, dampening rate-rise bets. The market is no longer fully pricing four rate increases over the coming year, with 93 basis points priced by December. Sterling trades flat at $1.3473 after reaching a seven-week high of $1.3506 overnight versus a weaker dollar. The euro rises 0.1% to 0.8344 pounds. (renae.dyer@wsj.com)
0754 GMT - The dollar remains under pressure after falling to a one-month low Wednesday following a sharp fall in oil prices and the Democratic sweep in midterm elections. Brent crude dropped to $93.22 per barrel, its lowest level since early September on Wednesday, on growing hopes for a resolution to the Iran war. Meanwhile, concerns that Democratic victory could result in a slowing in AI investment and reduce the prospect of additional fiscal stimulus raised concerns about weaker U.S. economic growth, hitting the dollar. The DXY dollar index falls 0.2% to 101.413, having reached as low as 101.099 Wednesday.(renae.dyer@wsj.com)
0738 GMT - The Philippine central bank is likely to tighten its policy rate moderately in December despite seeing a spike in inflation in October, ING's Deepali Bhargava says in a note. Headline CPI rose to a multi-year high in October, although Bangko Sentral ng Pilipinas has hiked its policy rate by 125 bps this year. Developments around Iran, a weaker dollar and lower oil prices. suggest that the BSP may prefer to assess the impact of its past rate hikes before moving aggressively again. ING reckons another jumbo hike is limited, if oil prices continue to ease and upcoming data show that Philippines' 3Q GDP growth is weak. ING's base case is for the BSP to deliver a 25bp rate hike in December. (amanda.lee@wsj.com)
0717 GMT - Pictet Asset Management expects to see fewer erratic policy moves after the greater than expected scale of Democratic victory in the U.S. mid-term elections. A Democratic-controlled Congress could curtail some of Trump's key policy initiatives, including further tax cuts, deregulation efforts and AI expansion, says Luca Paolini, Chief Strategist at Pictet Asset Management. It may also make a further escalation of the conflict with Iran more difficult, he adds. Nevertheless, investors should remember that presidential vetoes can only be overridden by a two-thirds majority in both chambers, a very high but not impossible hurdle.(jiahui.huang@wsj.com; @ivy_jiahuihuang)
0712 GMT - Heavy government bond supply from Spain and France, coupled with an Italian buyback auction, awaits investors Thurdsay as bond markets take some relief after a Democratic sweep in the U.S. midterm electons. "Relief after the blue wave is lifting all boats," Commerzbank's Rainer Guntermann says in a note. Spain will offer nominal and inflation-linked bonds, while France will sell long-dated government bonds. "Today's duration supply from France could put the long-end OAT spread tightening at least temporarily to the test," the rates strategist says. Italian front-end BTPs, meanwhile, could benefit from the buybacks, Guntermann says. (emese.bartha@wsj.com)
0702 GMT - There will still be some questions with the Democratic gains in the governor races as to whether AI capex and data-center growth is impaired or simply shifts to states with friendlier governments, Aptus Capital Advisors' John Luke Tyner says in a note. "I'd bet it slows but maybe not as much as feared," the portfolio manager and head of fixed income says. Regarding the prospects of further Federal Reserve rate hikes, "if the main pressures on inflation were energy prices and AI spend, I think there's a good chance the September 25bps hike was the last one of the cycle," Tyner says. Gridlock government tends to slow GDP growth, which probably opens the door for more downside in yields across the yield curve, he says. (emese.bartha@wsj.com)
0654 GMT - The broad market direction in fixed income remains intact after the midterm elections, says Aristotle Pacific's Jeff Klingelhofer in a note. "Inflation will continue to be a challenge, deficit concerns will surface sporadically, and we all must hope we avoid a situation like we are seeing in France," the managing director says. Investors are increasingly questioning the French government's ability to stabilize public finances. French bond yields have risen significantly in the past few weeks on concerns about violent street demonstrations in the country. Major shifts in U.S. policy are unlikely, and in many ways the markets cheer this specific outcome, he says. That said, the volatility associated with stability is often much higher than the statistics signal, he adds.
Comments