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.

1157 GMT - A further increase on the U.S. 10-year Treasury yields of around 50 basis points could make bonds significantly more attractive than U.S. equities, Societe Generale's Manish Kabra says in a note. Ten-year Treasury yields are down 1.2 basis points on the day to last trade at 4.694%, Tradeweb data show. The 10-year U.S. sovereign bond yields hit a 19-month high of 4.748% on Tuesday driven by inflation concerns due to the Middle East conflict. (miriam.mukuru@wsj.com)

1152 GMT - While July's pickup in headline inflation in the U.K. was expected, much more surprising was just how benign food inflation, ING's James Smith says in a note. Prices were flat on month, having fallen in on-month terms in the two prior readings, "something that is highly unusual," he says. Producer prices even point to negative annual food inflation, though that is less likely as it was always going to take at least a year for the full effects of the Iran War to show up, Smith says. Nevertheless, the data is welcome news for some Bank of England policymakers, who point to the influential role of food prices in setting household inflation expectations, he says. (edward.frankl@wsj.com)

1151 GMT - The dollar could remain under pressure as U.S. interest-rate rise expectations have been dialled back, Tapaas chief executive Jonathan Squires says in a note. Markets are pricing a 69% chance that rates will be left unchanged in September, LSEG data show. However, a rate rise is nearly fully priced for December. This should limit the dollar's falls, Squires says. The Federal Reserve's meeting minutest at 1800 GMT could provide some insight about future policy, he says. The Iran war could also continue to affect the dollar. "While a shift toward less U.S. military action and more economic sanctions could limit safe-haven demand, any new escalations could support the currency and yields." The DXY dollar index falls 0.2% to 99.415. (renae.dyer@wsj.com)

1101 GMT - Bitcoin and ether could continue to trade in a narrow range due to uncertainty over U.S. cryptocurrency regulation, Mesta founder Sandeep Pyapali says in a note. The White House is expected to host a meeting Wednesday with cryptocurrency executives including from Ripple and Coinbase to discuss regulation. The meeting comes as the Clarity Act, which establishes a regulatory framework for digital assets, has been stuck in the Senate since June with a procedural vote delayed until September 15. "Until the regulatory fog clears, bitcoin and ether could remain range-bound, even if the macro data improves," Pyapali says. Bitcoin falls 0.3% to $64,344, according to LSEG. Ether rises 0.3% to $1,918. (renae.dyer@wsj.com)

1056 GMT - The reacceleration in U.K. inflation to 2.9% in July reignites the possibility of a further interest-rate increase by the Bank of England, ICAEW chief economist Suren Thiru says. "July's uptick is unlikely to be a one-off, with drought-related increases in food prices and surging energy costs raising the prospect of inflation topping 3.5% later this year, especially if disruption in the Strait of Hormuz persists." Lower services inflation won't likely reassure BOE policymakers as it appears to reflect the temporary VAT cut on attractions and children's meals, rather than a cooling in underlying price pressures, he notes. While the data is unlikely to trigger a hike in September, it raises the prospect of further tightening before the end of 2026, Suren says. (edward.frankl@wsj.com)

1056 GMT - The U.K. inflation data for July shows that underlying domestic inflationary pressures look benign, Barclays's economists say in a note. Annual headline inflation rose to 2.9% in July from 2.6% in June, while annual core inflation was unchanged at 2.6%. Considering the weak U.K. jobs data, the key risk to U.K. inflation outlook will come from developments in the Middle East conflict, rather than domestic pressures, the economists say. (miriam.mukuru@wsj.com)

1031 GMT - Continued threats to the rupiah amid external uncertainty and meaningful risks from higher energy prices suggest that Bank Indonesia's latest rate hold is a pause rather than the end of its hiking cycle, UOB economists say. The central bank opted to maintain policy settings to preserve currency stability and keep inflation target-bound. The decision signals that BI is firmly focused on defending macro financial stability, and that its policy bias remains one of caution, with anchoring the rupiah continuing to take precedence over growth, writes economist Enrico Tanuwidjaja. Still, given the rupiah's relative steadiness in recent weeks, UOB scales back its BI forecast to just two additional 25bp rate hikes in 4Q. That would bring the policy rate to a terminal level of 6.25% by end-2026. (fabiana.negrinochoa@wsj.com)

1015 GMT - Yields on U.K. government bonds or, gilts, are likely to be mainly driven by developments in the Middle East in the near term, Aberdeen's Matthew Amis says in a note. The U.K. inflation data for July shows annual headline inflation increased to 2.9% from 2.6% in June, primarily driven by higher energy prices. "The data doesn't show any new sign of second-round inflationary effects from the Middle Eastern conflict," Amis says. As a result, the Bank of England is expected to keep interest rates on hold at 3.75% in 2026, unless the Middle East conflict escalates, Amis says. (miriam.mukuru@wsj.com)

1003 GMT - Sovereign exposure to refinancing risks and interest-cost pressures are rising in G-7 countries, Scope Ratings' Eiko Sievert says in a note. Countries with large primary deficits, elevated debt and relatively short average debt maturities are most vulnerable, weighing on fiscal resilience and creditworthiness, Sievert says. "Sovereign bond yields have continued to rise this year for the G-7 sovereigns, contributing to an increase in 10-year yields of around 180-380 basis points since early-2022, reaching levels comparable to those observed during the global financial crisis," the executive director says. The fiscal impact of higher borrowing costs is expected to become increasingly visible through rising interest expenditure, Sievert says. (emese.bartha@wsj.com)

0956 GMT - The won's turnaround may offer a lesson for the yen, ING's Chris Turner says, after the currency rose to near 11-month highs against the dollar. Korea has struggled with massive portfolio outflows and a weaker won for much of the year. Authorities tried various measures but what seems to have done the trick is Korea's domestic growth story, the strategist says. The artificial-intelligence investment and export boom has filtered into broader parts of the economy, backing a strong 2Q GDP print that helped the Bank of Korea raise rates in July. Exporters now seem more confident in repatriating foreign earnings. The won's rebound is a reminder that creating an attractive investment environment at home--through growth and higher interest rates--is an effective way to strengthen a currency, Turner says. (fabiana.negrinochoa@wsj.com)

0939 GMT - The cost of default protection for euro-denominated credit stays steady as markets await the minutes of the U.S. Federal Reserve meeting due to be published at 1800 GMT. The minutes could provide clues on the Fed members' views on the interest-rate outlook and on what the central bank might decide at the next policy meeting in September. The iTraxx Europe Crossover index of euro high-yield credit default swaps is unchanged at 253 basis points, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0939 GMT - U.S. Treasury yields and the dollar ease as investors take a breather after Tuesday's bond selloff and ahead of the Fed's minutes later in the day. "The U.S. dollar retreated on Wednesday toward its previous low as Treasury yields pulled back to some extent," Tapaas' Jonathan Squires says in a note. However, the dollar could remain under pressure as monetary-policy expectations have softened, he says. Markets currently assign a 67% probability for unchanged policy rates at the Federal Reserve's September meeting, according to LSEG. Longer-dated Treasury yields meanwhile remain near multiyear highs as fiscal spending remains a concern. The DXY dollar index falls 0.2% to 99.452. The 10-year Treasury yield eases 0.8 basis points to 4.697%, according to Tradeweb. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

August 19, 2026 07:57 ET (11:57 GMT)