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

0926 GMT - The timeline and process for selecting a successor to U.K. Prime Minister Keir Starmer is more important for sterling than Monday's news of his resignation, Convera strategist George Vessey says in a note. Markets had largely priced in Starmer's departure, limiting the market reaction to the announcement. Andy Burnham is the favorite to replace Starmer and markets seems relatively comfortable with that for now, he says. However, political uncertainty could re-emerge if investors begin to question Burnham's commitment to fiscal discipline, he says. "In that scenario, it is not difficult to envisage 10-year gilt yields testing the 5% level again and sterling sliding below $1.30." Sterling falls 0.1% to $1.3219. The 10-year gilt yield is unchanged at 4.839%. (renae.dyer@wsj.com)

0912 GMT - Sterling faces further potential falls due to uncertainties around fiscal policy after Prime Minister Keir Starmer resigned, Monex Europe analysts say in a note. Andy Burnham is the favorite to replace Starmer after his victory in a special election last week. "Changing the person in charge does nothing to solve the U.K.'s fiscal challenges, and we are yet to hear anything from Burnham that convinces us that he has a more credible plan than the current government," the analysts say. Nevertheless, sterling's near-term fortunes rest on who will be Treasury chief. Former health secretary Wes Streeting is a possible candidate that could provide some market relief, they say. Sterling falls 0.2% to $1.3204. The euro rises 0.1% to 0.8669 pounds. (renae.dyer@wsj.com)

0901 GMT - The tech sector is propelling both the Chinese economy and the equity market, Goldman Sachs says in a research note. "Although policymakers have shown some concerns over the latest weakness in consumption growth, policy signals still point to unwavering support for tech and AI," GS says. For example, the National Bureau of Statistics touted China's technological advances in areas such as optical quantum computing during its press conference after the May data release, GS notes. Meanwhile, even though the Shanghai Composite Index has been largely flat year to date, the IT sector index has rallied by over 50%, GS adds. (tracy.qu@wsj.com)

0900 GMT - Sterling stays lower after U.K. Prime Minister Keir Starmer announced he would resign. The move was widely expected as Starmer faced pressure from Labour lawmakers to make way for Andy Burnham to replace him, according to media reports. Burnham won a special election last week, creating a path for him to enter a leadership contest. Sterling falls 0.3% to $1.3194 and the euro rises 0.1% to 0.8673 pounds, both little changed from levels before the announcement. (renae.dyer@wsj.com)

0857 GMT - Yields on U.K. government bonds stay higher after U.K. Prime Minister Keir Starmer announced his resignation on Monday. Uncertainty about U.K.'s political and fiscal outlook are causing investors to add a risk premium on U.K. government bond yields. Gilt yields could stay elevated in the coming months due to concerns about the risk of higher public spending under a new leader, Pantheon Macroeconomics economists say in a note. Ten-year gilt yields rise 0.8 basis points to last trade at 4.848%, Tradeweb data show. (miriam.mukuru@wsj.com)

0844 GMT - Global bonds are expected to decouple from oil prices and from each other, Capital Economics says in a note. The head of Asia-Pacific markets Thomas Mathews says, despite renewed U.S.-Iran tensions over the weekend initially threatening to unsettle markets, sentiment has improved slightly after encouraging comments from Iranian negotiators. For bond markets, the big picture remains that the ceasefire in the Iran war and last week's hawkish Fed commentary are driving U.S. Treasuries away from crude oil price movements. CE says as long as tensions between the U.S. and Iran don't re-escalate, domestic macro drivers, rather than oil price swings, will once again become the key influence on global markets. (jason.chau@wsj.com)

0826 GMT - China is likely to speed up fiscal spending in the near term, according to Goldman Sachs in a research note. The pace of fiscal spending slowed significantly in March and April after January-February activity data beat expectations, GS says. Combining the general public budget and government-managed fund budget, total government expenditure dropped from a growth of 6.1% on year in January-February to a decline of 7.3% on year in April, they say. The pace of government bond issuance and fiscal spending is likely to accelerate in the coming months as April and May activity data have disappointed, GS says. (tracy.qu@wsj.com)

0817 GMT - Any new U.K. leader is likely to be confronted by the same fiscal pressures currently facing the nation, Capital Economics' Thomas Mathews says in a note. The latest public finances data showed that public sector net borrowing in May rose above the Office for Budget Responsibility forecast. The U.K. could get a new prime minister as the current leader Keir Starmer is expected to step down on Monday according to media reports. "There is little room to increase spending without risking a backlash from the bond market," Mathews says. (miriam.mukuru@wsj.com)

0803 GMT - Sterling's reaction to the prospect of a U.K. leadership change has been relatively contained, ING's Francesco Pesole says in a note. "Our short-term fair value model shows no overvaluation in euro versus sterling, suggesting no political risk premium." That indicates markets are relaxed about a potential leadership change but means greater downside for sterling should fiscal concerns resurface, he says. Prime Minister Keir Starmer is expected to announce his resignation on Monday, according to media reports, and Andy Burnham is the favorite to replace him. The limited market reaction reflects Burnham adopting a more market-friendly tone on his budget plans. The next key test is the choice for Treasury chief, Pesole says. The euro rises 0.1% to 0.8673 pounds. (renae.dyer@wsj.com)

0747 GMT - Front-loading of shipments ahead of potential U.S. semiconductor tariffs in July have likely pulled forward demand, temporarily boosting Malaysia's export performance, CGS International economist Mas Aida Che Mansor says in a note. There is a risk of normalization in 2H, she says. She raises her forecast for 2026 export growth to 18.1% from 7.9%, following a stronger-than-expected trade performance so far. Meanwhile, targeted fuel subsidies, price controls on essential goods, and continued cash aid are expected to help contain near-term inflation, she notes. CGSI maintains its 2026 inflation forecast at 2.5%. CGSI is continuing to monitor developments in U.S.-Iran peace negotiations and Malaysia's subsidy rationalization plans. (yingxian.wong@wsj.com)

0736 GMT - The 10-year Japanese government bond yield is expected to rise above 2.7% over the next three months, driven by fears that planned consumption-tax cuts would deteriorate the nation's fiscal health even further, says NLI Research Institute economist Tsuyoshi Ueno. "In addition, concerns over the possibility that the Bank of Japan will fall behind the curve [in addressing inflation] could also lead to a rise in bond yields," Ueno says. The 10-year JGB yield was last up 2.5 bps at 2.670%. (megumi.fujikawa@wsj.com)

0732 GMT - Despite the recent memorandum of understanding between Iran and the U.S., the effects of the Middle East war continue to pose a risk to the United Arab Emirates' economic outlook, S&P Global Ratings says in a note. That said, the anticipated opening of additional hydrocarbon export routes, a likely increase in oil production from 2027, and the UAE government's large fiscal and external buffers in the form of sovereign wealth fund assets and foreign exchange reserves could all support a period of recovery, the ratings firm says. Although not S&P Global Ratings' base case, a resumption of the war could lead to uneven recovery across sectors and could have a severe credit impact on the UAE. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

June 22, 2026 05:26 ET (09:26 GMT)

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