The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1045 GMT - Yields on U.K. 10-year government bonds climb to the highest level since 2008 as the Middle East war raises concerns about prolonged energy supply shock and the risk of high inflation. In addition, the latest U.K. public finances data for February showed rise in government borrowing, reviving fears about the U.K.'s fiscal sustainability. U.K. public borrowing rose to 14.3 billion pounds ($19.2 billion) in February, from a 30.4 billion pounds surplus in January, higher than the consensus forecast by economists in a WSJ poll of 9.3 billion pounds of borrowing. Ten-year gilt yields hit a high of 4.942%, LSEG data show. (miriam.mukuru@wsj.com)
1020 GMT - Yields on U.S. Treasurys and eurozone government bonds turn higher. Markets remain volatile due to uncertainty surrounding the Middle East war and energy prices. Yields rise as oil prices turn higher again, with Brent crude last up 1.2% at $109.99 a barrel. "When crude rallies, sentiment more broadly sours, and government bonds sell off as markets price a higher inflation profile moving forwards," says Pepperstone's Michael Brown. Markets had calmed earlier after Prime Minister Benjamin Netanyahu suggested Israel would refrain from future strikes against Iranian oil fields. U.S. 10-year Treasury yields rise 1.7 basis points to 4.302%. Eurozone 10-year government bond yields rise up to 4 basis points, with Germany's 10-year Bund yield up 3.2 basis points at 2.990%, Tradeweb data show. (jessica.fleetham@wsj.com)
1011 GMT - Deutsche Bank has pushed up its U.K. inflation forecast for 2026 to 3%, from 2.4% previously, given the rise in energy costs amid the Middle East conflict. The impact of the surge in energy cost on the inflation outlook will be meaningful, Deutsche Bank's Sanjay Raja says in a note. There is a possibility that the U.K. government will offer support to consumers to help curb energy inflation, the economist says. (miriam.mukuru@wsj.com)
1010 GMT - The U.K. government's fiscal position was worse than expected heading into the energy crisis, leaving less scope to support households and businesses, Ruth Gregory at Capital Economics says in a note. Public borrowing was 14.3 billion pounds in February, above Capital Economics's forecast of 7.5 billion pounds. "February's public finances figures showed that the fiscal position was worse than expected even before the full impact of the surge in energy prices is felt," Gregory says. Borrowing could soon rise further, while weaker growth and higher inflation could erode roughly half of the government's fiscal headroom. Any fiscal support package to help households and businesses "will probably need be smaller than the measures introduced in 2022," Gregory says. (don.forbes@wsj.com)
0956 GMT - The cost of insuring euro credit against default jumps as Middle East tensions dominate markets. Energy prices remain elevated compared to prewar levels, causing investors to price in the risk of high inflation and possible interest-rate hikes by key central banks. The iTraxx Europe Crossover index of euro high-yield credit default swaps jumps 24 basis points to 335bps, the highest level in 10.5 months, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0938 GMT - China is expected to further ease its monetary policy settings, but only in a calibrated, targeted way, says BNP Paribas's Wei Li. The PBOC's "moderately loose" stance leaves room for measures including RRR cuts and interest-rate adjustments. However, Li cites three main constraints that limit aggressive easing: imported inflation from oil-price spikes; currency stability pressures as the dollar strengthens on safe-haven flows; and financial risk concerns amid property-sector vulnerabilities. A prolonged Middle East conflict is shifting priorities toward financial-market stability and energy security, with policymakers wary of oil-driven cost pressures, Li says. "China's relative insulation from direct energy shocks (compared to Japan and Korea) provides some policy autonomy, but external volatility necessitates careful calibration between domestic support and external stability," Li says. (jihye.lee@wsj.com)
0918 GMT - U.K. public finances are expected to come under strain due to effects of the Middle East war, Quilter's Lindsay James says in a note. The latest public finances data show borrowing in February was 14.3 billion pounds ($19.2 billion), higher than the consensus forecast by economists in a Wall Street Journal poll for borrowing of 9.3 billion pounds. High energy costs due to the U.S.-Iran conflict raise the risk of elevated inflation which add to inflation-linked government expenses, James says. "With U.K. growth already challenged, such a scenario of higher inflation and weaker growth playing out would be a really bad place to be given the level of inflation-linked costs." (miriam.mukuru@wsj.com)
0831 GMT - Yields on U.K. government bonds fall modestly as market calm returns after the U.S. urged Israel to halt attacks on Iran's energy fields. The news brought some relief that this week's attacks on energy infrastructure would not spiral into something worse, Deutsche Bank strategists say in a note. U.K. public borrowing data released on Friday showed borrowing at 14.3 billion pounds in February, higher than the 9.3 billion pounds consensus forecast by economists in a WSJ poll. Ten-year gilt yields decline 0.4 basis points to last trade at 4.837%, Tradeweb data show. (miriam.mukuru@wsj.com)
0822 GMT - Bitcoin rises slightly as European equities start the day in positive territory. However, it remains at weaker levels after dropping well below $70,000 on Thursday to its lowest in more than a week. The cryptocurrency's falls followed a cautious tone from the U.S. Federal Reserve in response to uncertainties surrounding the war in the Middle East and elevated energy prices, Saxo analysts say in a note. "The key takeaway for investors is that crypto is once again behaving like a macro-sensitive asset, reacting to interest rate expectations, dollar strength, and geopolitical developments rather than purely crypto-specific drivers," they say. Bitcoin rises 1.1% to $71,250, having fallen to $68,802 on Thursday, LSEG data show. (jessica.fleetham@wsj.com)
0814 GMT - Asian currencies are expected to face renewed pressure as regional central banks prioritize domestic inflation and FX stability over closely tracking the cycle of the Federal Reserve. BNP Paribas strategist Chandresh Jain flags the baht, the won and the Indian rupee as most exposed to higher energy prices, while the ringgit and the rupiah are relatively insulated. Regional authorities may tolerate broad U.S. dollar strength but are likely to act if FX weakness threatens to fuel imported inflation, Jain says. With energy prices and potentially food prices rising, second-round effects could test policymakers' resolve and drive more differentiated policy paths across Asia. (jihye.lee@wsj.com)
0757 GMT - The dollar rises slightly, reversing some of its falls the previous day. Thursday's falls came as oil prices dropped amid easing concerns over energy supply disruption stemming from the Middle East war. Oil prices stay lower on Friday but large uncertainties remain surrounding how long the conflict will last and how long energy prices will stay elevated. "The foreign exchange market will therefore have to brace for continued volatility in exchange rates as long as the conflict persists and brings new twists every day," Commerzbank's Volkmar Baur says in a note. The DXY dollar index rises 0.1% to 99.341, having fallen to an eight-day low of 98.975 on Thursday. (jessica.fleetham@wsj.com)
0748 GMT - Some Southeast Asian countries could face higher food inflation if the Middle East conflict persists, DBS economists write in a note. Food carries a significant weightage in these countries' consumer-price index basket, with Thailand, Vietnam and the Philippines being most vulnerable to increasing food prices. The Middle East is a dominant global exporter of nitrogen-based fertilizers, including urea, and accounts for 20% to 30% of the global share. "In terms of direct impact, we assess that Thailand--a key agriculture producer--is the most vulnerable regionally," DBS says. Singapore is also exposed to international food price shocks, despite diversifying across multiple sources.(amanda.lee@wsj.com)
(END) Dow Jones Newswires
March 20, 2026 06:45 ET (10:45 GMT)
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