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.

0928 GMT - The cost of euro credit default protection declines as market sentiment improves following the U.S. Federal Reserve interest-rate decision on Wednesday. The Fed raised interest rates by a quarter-point as widely expected, and signalled the possibility of more rate increases at future meetings. This reduced the uncertainty around the U.S. interest-rate outlook, resulting in renewed appetite for risk assets. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 2 basis points to 257bps, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0922 GMT - The Bank of England will most likely hold rates at 3.75% later today, but could signal that a hike is coming in November, Kathleen Brooks at XTB says in a note. "We could get a hawkish hold from the BOE today." A hike this week would be futile, with inflation driven up by global oil prices which the BOE can't control, Brooks says. But inflation could peak above 4% this year, with oil prices continuing to rise and drought conditions putting upward pressure on food prices--as flagged by Governor Andrew Bailey last week. "A peace deal between the U.S. and Iran is the only avenue to avoid higher rates in the U.K. in the coming months," Brooks says. (don.forbes@wsj.com)

0917 GMT - Pressure is intensifying around German Chancellor Friedrich Merz, Holger Schmieding at Berenberg says in a note. Still, while the risk of his party revolting against him has risen sharply following a collapse in support at a key local election, planned growth, defense and infrastructure spending is likely to continue, he says. "Even in the risk scenario of a coup against Merz, the CDU/CSU-SPD coalition would probably stay on and deliver further reforms," noting that an unpopular government would have even more incentive to invest. Schmieding expects Merz to survive until the next regular federal election in early 2029. But if the party suffers another poor showing in upcoming local elections, things could come to a head sooner rather than later, he adds. (don.forbes@wsj.com)

0835 GMT - Sterling could appreciate modestly if the Bank of England keeps interest rates unchanged as expected but indicates a rate rise at the following meeting in November, MUFG Bank's Derek Halpenny says in a note. In this case, short-dated yields could rise slightly as back-to-back rate increases get better priced in by markets, he says. "That will help support the pound although we remain skeptical of upside scope of any notable magnitude ahead of the U.K. budget on October 28." Moreover, the Federal Reserve and European Central Bank have raised rates this month. The BOE announces its decision at 1100 GMT. Sterling trades flat at $1.3387. The euro rises 0.1% to 0.8568 pounds. (renae.dyer@wsj.com)

0834 GMT - Yields on U.K. 10-year government bonds, or gilts, could drop in the coming year as markets revise down U.K. inflation expectations, ING strategists say in a note. The U.K. labor market is weak, lowering the risk of inflation pass-through to wages, the strategists say. Bank of England interest rates also remain restrictive at 3.75%, they say. "We expect the BOE to hold rates steady for the time being and even see scope for cuts in 2027." Investors price a 20% possibility of a BOE rate increase during Thursday's decision at 1100 GMT, LSEG data show. However, three quarter-point rate rises are priced by March 2027. Ten-year gilt yields climb 1.6 basis points to 5.311%, Tradeweb data show. (miriam.mukuru@wsj.com)

0830 GMT - Risks for the dollar appear more balanced after the positive impact of Wednesday's U.S. interest-rate rise has been absorbed, although they remain titled towards further gains in the near term, ING's Francesco Pesole says in a note. The Fed's signals for further tightening should allow markets to fully price in another rate rise in October if warranted by data and oil prices, he says. The Fed's pledge of monetary discipline are also supportive for the dollar along with oil prices remaining elevated, he says. ING expects the dollar to stabilize around current levels in coming months. The DXY dollar index is steady at 100.241 after reaching a one-and-a-half-month high of 100.367 overnight. (renae.dyer@wsj.com)

0741 GMT - Gold slips after trading higher in early Asia trade. Its price trajectory is increasingly dependent on the pace of U.S. interest increases, MUFG's Soojin Kim writes. The Fed hiked rates Wednesday after higher energy prices and stronger-than-expected underlying inflation added to price pressures. Inflation and elevated Treasury yields limit gold's upside despite geopolitical and safe-haven providing support, she says. In New York, the precious metal falls 0.5% to $4,365.50 a troy ounce. (adam.whittaker@wsj.com)

0731 GMT - The Bank of England could refrain from raising interest rates on Thursday and at upcoming meetings, leaving sterling vulnerable to potential falls, Commerzbank's Michael Pfister says in a note. Even if the BOE decided during the year that a rate rise was appropriate, the more than four increases priced by the end of next year would still be unlikely, he says. "Given the weak labor market, we continue to see the potential that the BOE will disappoint expectations more than other central banks, and therefore we stand by our expectation of a weaker pound." The BOE's decision is at 1100 GMT. Sterling rises 0.1% to $1.3390 as the dollar eases but falls 0.1% versus the euro to 0.8569 per euro. (renae.dyer@wsj.com)

0727 GMT - Yields on U.K. government bonds, or gilts, decline modestly ahead of a Bank of England rate decision at 1100 GMT. Investors expect rates to stay on hold and will watch the vote split and the BOE's evaluation of the second-order inflation effects. Markets price in only a 19% chance of a rate hike on Thursday but fully expect three quarter-point rate increases by March 2027, LSEG data show. The U.S. Federal Reserve raised interest rates on Wednesday as widely expected. Fed Chairman Kevin Warsh emphasized that inflation remains very high, raising the prospects of more Fed rate rises at future meetings. Ten-year gilt yields fall 1.3 basis points to last trade at 5.282%, Tradeweb data show.(miriam.mukuru@wsj.com)

0720 GMT - Singapore's "blockbuster" nonoil domestic exports performance in August is likely to be unsustainable, OCBC's Selena Ling says in a report. NODX jumped 46.2% from a year earlier last month, marking its strongest expansion since October 1988. However, the latest data may have overstated the underlying momentum as there was a low base. Looking ahead, memory prices, advanced packaging demand and artificial-intelligence server orders could be indicators of how NODX would fare. OCBC raises its forecast for Singapore's 2026 NODX growth to 20% from 15.2% previously, after partly factoring in that exports have risen 22.4% in the first eight months of this year from a year earlier. (amanda.lee@wsj.com)

0711 GMT - The Bank of England is widely expected to announce a reduction in the pace of quantitative tightening for the year starting in October at its decision later. Quantitative tightening is the process of shrinking the BOE's gilt holdings purchased during previous periods of quantitative easing. Analysts estimate the BOE could reduce the pace to around 50 billion pounds annually in the year starting in October, from 70 billion pounds currently. "While this won't dramatically decrease bond yields, it could reduce the upward pressure," XTB's Kathleen Brooks says in a note. Ten-year gilt yields hit a 19-year high of 5.439% this week mainly due to inflation concerns and tracking the global rise in government bond yields. They last trade at 5.292%. (miriam.mukuru@wsj.com)

0705 GMT - Bitcoin rises slightly as U.S. stock futures point to a higher open, recovering from falls after Wednesday's interest-rate rise by the Federal Reserve. The Fed lifted rates by 25 basis points, which was more than 90% priced by markets, according to LSEG. However, the unanimous vote in favor of the move along with officials' projections for at least one more rate increase briefly hit market sentiment. Tech stocks helped to limit the impact of the decision though as the Philly Semiconductor Index advanced, Deutsche Bank analysts say in a note. Oil prices are also lower as headlines suggest an improved outlook for oil flows out of the Middle East, they say. Bitcoin rises 0.5% to $76,474, LSEG data show.(renae.dyer@wsj.com)

(END) Dow Jones Newswires

September 17, 2026 05:28 ET (09:28 GMT)