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

1116 ET - Canada's central bank is in a bind as it navigates a weak domestic economy, higher inflation from the ongoing U.S.-Iran conflict and elevated trade policy and geopolitical uncertainty, Oxford Economics' Michael Davenport says. Yet for all that, the economist expects soft core inflation, excess slack in the economy and prolonged trade policy uncertainty to keep the Bank of Canada on hold until late 2027. The bank has now left its policy rate unchanged six times running, though markets are still pricing in one quarter percentage point rise before year-end, says Davenport, who argues nearterm risks are more skewed to the downside and could lead to rate cuts if the economy stays weak and core inflation remains subdued. (robb.stewart@wsj.com, @RobbMStewart)

1113 ET - A recent run of firmer data in Canada, as well as robust financial markets, has the Bank of Canada a bit more upbeat on the near term outlook but not enough to convincingly shift the medium-term view, Bank of Montreal's Douglas Porter says. The economist says that until there are clear signs that the country's output gap is closing on a consistent basis, it is going to be challenging for the central bank to turn more hawkish. And he adds volatility in energy prices is also keeping the BoC on high alert. "The bank is firmly on hold, and we expect them to remain there through the rest of 2026, assuming that oil prices don't flare dramatically higher from here," Porter says. (robb.stewart@wsj.com, @RobbMStewart)

1105 ET - Both upside and downside risks for Canada are getting smaller, with growth improving even as inflation has remained well anchored around 2%, Ninepoint Partners' Etienne Bordeleau-Labrecque says. So while the tone of the Bank of Canada's comments accompanying its decision to leave interest rates steady are neutral, the portfolio manager says the odds are tilted toward an eventual rate increase. For interest rates, Bordeleau-Labrecque says it means that the Canadian bond market has materially outperformed the U.S. market lately. He expects this outperformance to reverse as better data comes in, gradually pushing the market to price-in rate increases late in 2026 or early 2027. (robb.stewart@wsj.com; @RobbMStewart)

1056 ET - U.S. technology and telecommunications sectors have come under pressure in recent weeks, causing the U.S. investment-grade credit segment to underperform high-yield credit, Societe Generale's Juan Valencia says in a note. U.S. investment-grade credit spreads have been widening at a greater pace than their high-yield peers due to weakness in the tech and telecommunications industries, he says. The two sectors could continue to face pressure in the coming weeks as companies release their earning reports, Valencia says. (miriam.mukuru@wsj.com)

1055 ET - Bank of Canada's decision to keep the policy rate at its current level signals that officials have no intention to respond to energy-driven inflation with interest-rate increases, says Thomas Ryan from Capital Economics. The economist says the BOC decision, and accompanying communications, signals officials remain preoccupied with soft labor-market conditions and increased spare capacity. "This reinforces our view that the BOC will remain on hold this year," Ryan says, adding that near-term adjustments to the rate policy appear to be off the table. (paul.vieira@wsj.com; @paulvieira)

1045 ET - Desjardins continues to anticipate the Bank of Canada will remain on the sidelines through the rest of the year, after leaving the policy interest rate unchanged a sixth time in a row. Economist Royce Mendes notes the tone of the central bank's communications is very neutral, though markets are treating the releases as dovish likely because the bank removed reference to consecutive rate increases. Traders are pricing in a roughly 67% chance the Bank of Canada raises rates. Mendes continue to disagree, arguing the probability of rate cuts is at least as likely as rate rises. Still, he says significant changes in the outlook for oil prices or trade with the U.S. could swing the view. (robb.stewart@wsj.com, @RobbMStewart)

1037 ET - The Bank of Canada is turning positive about the economic outlook, says Karl Schamotta, chief market strategist at forex firm Corpay, after reviewing the central bank's decision to keep its policy rate unchanged at 2.25%. Updated projections indicate BOC analysts think GDP grows 0.7% this year after a 1Q nadir, with expansion accelerating to 1.8% in both 2027 and 2028. Headline inflation is seen staying elevated in the coming months as energy prices feed through, Schamotta says, adding officials aren't seeing "broad spillovers" in core categories. Gov. Tiff Macklem, in remarks ahead of a press conference, drops references to rate hikes and rate cuts, which Schamotta says is a sign that the BOC "now sees risks to its mandate beginning to diminish." (paul.vieira@wsj.com; @paulvieira)

1028 ET - The Fed remains likely to keep rates elevated, despite June's inflation cooldown. Markets price 88% odds of a hold this month, and 74% of at least one increase by December, according to CME. Economists still expect June PCE, the Fed's preferred measure, to print well above the 2% target. Bank of America's Yuri Seliger and Sohyun Marie Lee write that "the combination of higher oil prices...and a very resilient US consumer should also keep the Fed outlook relatively hawkish." They add that, as a result, "yields should remain elevated in 2H-2026, supporting investor demand," which, in turn, "is particularly important as supply is finally beginning to weigh on IG spreads." (paulo.trevisani@wsj.com; @ptrevisani)

1028 ET - Gold prices reversed earlier declines after the latest U.S. inflation data came in lower than expected, easing some concerns over the interest-rate policy outlook. Wholesale prices dropped last month as a decline in energy prices helped cool down the prices charged by producers. The data followed Tuesday's June consumer-inflation figures, which showed that prices paid by shoppers also declined, pulling down the 12-month inflation rate. In early U.S. trade, New York gold futures are up 0.1% at $4,071.80 a troy ounce. The U.S. dollar index is down 0.1% to 100.80, making dollar-denominated commodities cheaper for overseas buyers. (giulia.petroni@wsj.com)

1023 ET - Major markets in the Gulf Cooperation Council end mixed, with Dubai rebounding after two straight declines while Saudi Arabia and Abu Dhabi extend losses slightly. Dubai's move appears mainly technical after the recent pullback and was supported by improved global sentiment following softer U.S. inflation data, says Mazen Abou Ismail, head of trading desk at FFA Private Bank Dubai. Regional shipping and security risks remain, but investors seem to view them as contained for now. GCC markets remain supported by solid domestic fundamentals, though geopolitical developments remain the key risk, he says. The Dubai Financial Market General Index rises 0.4%, while Abu Dhabi's benchmark index falls 0.2% and Saudi Arabia's Tadawul All Share Index slips 0.1%. (farhan.rafid@wsj.com)

1001 ET - The Japanese yen should recover by the end of next year as the fundamentals remain stacked in the currency's favor, Capital Economics economist John Higgins says in a note. The yen's current weakness is puzzling, he says. The five-year U.S.-Japan sovereign bond yield gap has shifted in the yen's favor, he says. The once significantly positive U.S.-Japan real inflation-adjusted policy rate gap has also evaporated. Japan's terms of trade have improved on a net basis in recent years, even allowing from some re-worsening as the Iran war drives up oil prices, he says. The dollar trades flat at 162.22 yen and Capital Economics expects it to fall to 150.00 by end-2027. (renae.dyer@wsj.com)

0959 ET - Bitcoin could see a breakout toward the $70,000 mark after finding a multi-year low around $58,000 just weeks ago. What's changed is the outlook toward inflation, with yesterday's CPI report and today's PPI report from the Department of Labor being friendlier than anticipated. "A break above $66k is now looking more likely, and the case for a final $70k-$75k push by month's end is looking likely, especially if tensions in the Middle East cool," says Matt Mena of 21shares. Mena adds that altcoins like ethereum are showing even stronger reaction to the change in the inflation outlook, while tokens like Hyperliquid also surge. Bitcoin is up 1.2% to $65,279. (kirk.maltais@wsj.com)

(END) Dow Jones Newswires

July 15, 2026 11:16 ET (15:16 GMT)

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