Global Forex and Fixed Income Roundup: Market Talk

The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0539 GMT - U.S. Treasury yields decline across maturities, though stay at elevated levels, as Brent oil is largely stable, while market expectations of Federal Reserve interest-rate hikes are weakening. "Expectations of Fed hikes are being reduced," Danske Bank's Filip Andersson says in a note. The market is currently pricing in 35 basis points of Fed rate hikes for the next 12 months, less than Danske's call of two hikes of 25 basis points each. The Middle East situation remains fluid, with little progress in talks to reopen the Strait of Hormuz. The two-year Treasury yield falls 1.5 basis points to 4.155%, while the 10-year yield is down 1.4 basis points at 4.681%, according to Tradeweb. (emese.bartha@wsj.com)

0531 GMT - Given the recent rise in long-end bond yields in major markets, including the U.S., Japan and the U.K., analysts at Bank of America say they do not see any single driver. "There is not a single driver to point to, but excessively loose fiscal policy is generally a common factor," they say in a note. In the U.S., the rise in long-end rates has happened despite the fact that the Treasury has kept coupon auction sizes stable, essentially pivoting more and more to shorter-term funding, the analysts say. (emese.bartha@wsj.com)

0530 GMT - The price of newly listed homes for sale fell 2% in August, the largest drop for the month since 2018 in a traditionally quiet time for the market, property website Rightmove says. The average price was 364,999 pounds, 1% lower than at this point last year. The number of homes on the market for sale is also at a 12-year high for the time of year, Rightmove says. "Buyers have the widest choice of homes for sale at this time of year in more than a decade, so standing out on price for the right reasons is hugely important," Rightmove's Colleen Babcock says. (ian.walker@wsj.com)

0522 GMT - Malaysia's inflation should remain manageable, with targeted subsidies continuing to cushion households from near-term swings in global fuel prices, Kenanga economists say in a note. However, higher crude oil prices following stalled U.S.-Iran talks on reopening the Strait of Hormuz could raise transport, food and production costs, and prolonged disruptions could feed into consumer prices, they say. El Nino-related weather disruptions could also pressure up food inflation, they add. Kenanga maintains its 2026 Malaysia inflation forecast at 2.1%, compared with 1.4% in 2025. It expects Bank Negara to keep the policy rate at 2.75% through 2026, as underlying inflation remains contained and domestic demand resilient.(yingxian.wong@wsj.com)

0520 GMT - The pace of Japan's economic growth slowed in the April-June quarter due to weak corporate and household spending, government data showed Monday. However, there is little reason to be overly pessimistic about the results, says Daiwa Securities economist Kento Minami. Real incomes continue to improve in the household sector, while corporate investment appetite for labor-saving, artificial intelligence, and digital transformation remains resilient on the back of strong profits. "With signs of improvement emerging in both consumer and business sentiment, the recovery momentum for the Japanese economy appears intact," he says. (megumi.fujikawa@wsj.com)

0516 GMT - The growing disconnect between geopolitical uncertainty and asset-price volatility has been a puzzling feature of markets in recent months, says Federated Hermes's John Sidawi in a note. Event risk has remained notably elevated since late February, driven largely by the conflict in the Middle East and an increasingly unpredictable policy backdrop from the U.S., but "this does not appear to be reflected in either implied or realized volatility," says the fixed income portfolio manager. The most compelling explanation for the current volatility puzzle is not that investors have become complacent, but that they have become exhausted, he says. For now, markets appear willing to tolerate a significant amount of uncertainty without demanding higher risk premiums, while this equilibrium is unlikely to be permanent, he says. (emese.bartha@wsj.com)

0516 GMT - For U.S. Treasurys, Morgan Stanley is betting on a seven- to 30-year steepener and it also sees the historically stronger half of August still to come, its strategists say in a note. "Over the past 25 years, the U.S. Treasury index returned 0.64% in August in excess of T-bills, its best month, and the result clears the 95% significance threshold," they say. Since 2011, the August pattern has concentrated in the second half of the month. U.S. Treasury delivered negative second-half excess returns in only two of the past 14 years, they add. (emese.bartha@wsj.com)

0511 GMT - It seems that it is becoming increasingly apparent that the Bank of Japan will need to be permitted to hike rates at its September meeting, accelerating the path of monetary policy normalization, in order to stymie further pressure ahead, says Mark Dowding of RBC BlueBay Asset Management in a note. "Their hope, in the short term, will be that intervention and the threat of intervention will be enough to contain price action until the next BOJ meeting takes place," he says. Money markets are pricing in a 61.5% probability of a 25-basis-point rate hike by the BOJ at the September meeting, according to LSEG. (emese.bartha@wsj.com)

0510 GMT - The improvement in supply-demand for Japanese super-long bonds due to reductions in JGB issuance to date has prompted Citi to maintain a consistently positive view on the super-long sector, strategist Tomohisa Fujiki says in a note. "However, if volatility increases due to concern regarding fiscal policy, the effect could well spill over into the long-term sector," he says. Citi has for some time pointed out the increased linkage to overseas markets. "Whatever the trigger, if upward momentum for interest rates strengthens and they break above the established range, price movements are likely to be amplified." (emese.bartha@wsj.com)

(END) Dow Jones Newswires

August 17, 2026 01:39 ET (05:39 GMT)