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

2013 ET - JGB futures are mixed in the early Tokyo session, but may be supported by overnight price gains in the U.S. Treasury market. "Japanese and U.S. yields have recently become more closely correlated," SMBC Nikko Securities' Ataru Okumura says in a recent note. "UST yields are likely to face upward pressure from AI boom-driven strength in business sentiment, inflationary pressure, and fiscal concerns," the chief Japan rates strategist says. "In Japan, fiscal developments could re-enter the spotlight as ministries gradually unveil their requested budgets for FY27," Okumura adds. September 10-year JGB futures contract is 0.05 yen lower at 126.54 yen, while December contract is 0.03 yen higher at 125.94 yen. (ronnie.harui@wsj.com)

2011 ET - Japanese stocks are lower after U.S. technology shares fell overnight. Chip and other electronics stocks lead declines. Kioxia Holdings falls 2.8%, Advantest is 3.6% lower and Panasonic Holdings is down 4.0%. The dollar is at 159.13 yen, compared with Y158.94 as of Monday's Tokyo stock market close. Investors are closely watching the Iran war and crude oil prices after Treasury Secretary Scott Bessent said the U.S. is launching a new campaign to isolate the Iranian regime. The Nikkei Stock Average declines 0.8% to 64980.53. (kosaku.narioka@wsj.com; @kosakunarioka)

1948 ET - Japanese stocks may fall after U.S. technology stocks dropped overnight. Continued uncertainty over the Middle East conflict may also weigh on the market. Nikkei futures are down 0.3% at 65280 on the SGX. The dollar is at 159.11 yen, compared with Y158.94 as of Monday's Tokyo stock market close. Investors are focusing on the Iran war and crude oil prices after Treasury Secretary Scott Bessent said the U.S. is launching a new campaign to isolate the Iranian regime. The Nikkei Stock Average fell 0.7% to 65528.09 on Monday. (kosaku.narioka@wsj.com)

1927 ET [Dow Jones]--Higher borrowing costs beget higher yields, especially without a credible fiscal plan, says Sonali Basak, chief investment strategist at iCapital. Fiscal credibility is crucial to compressing the term premium, which has steadily widened over recent months, demonstrating that inflation expectations alone aren't driving the selloff at the long end of the curve, she says. Net interest outlays, one reflection of how much higher yields are causing a greater dent in U.S. budget shortfalls is already a meaningful part of the total U.S. deficit, and expected to grow closer to 5% of GDP by the end of the next decade, she says. (james.glynn@wsj.com; X @JamesGlynnWSJ)Australia's housing downturn is underway. Higher interest rates and tax changes have made property less attractive. Prices are likely to fall further. Even so, national house prices are unlikely to fall far during this cycle, says Nerida Conisbee, chief economist at property group Ray White. The downturn is not occurring evenly, she says. If prices keep falling at their recent rate for another nine months, only then would the annual decline reach 7.9% and become comparable with the Global Financial Crisis in 2008, she says. The GFC downturn occurred during a global credit shock. The current market is markedly different, she adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)The Reserve Bank of New Zealand is likely to raise the official cash rate a further 25 basis points at its policy meeting on Sept. 2, taking it to 2.75%, says Sharon Zollner, chief economist at ANZ. A third rate hike in October is roughly a 50/50 likelihood, she adds. Beyond that, it wouldn't be a surprise to see something like the bank's May OCR forward track implying risks that are tilted toward it going higher than 3%, but that it is far from a certainty. The market is pricing over a 90% chance of a hike at this meeting but is on the fence as regards a follow-up in late October, Zollner adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)U.S. bonds are cheaper than they have been in years. But wait, they are still not cheap enough, says Barclays in a note to clients. The only reason to be a bond bull right now is if you believe a sharp economic pullback is coming - a collapse in growth, a financial accident, or a shock severe enough to force the Fed back into cutting mode. That is always possible. But it is not Barclay's base case, and it is not what the data is pointing too. Every data point suggests that 10-year yields are still not high enough to compensate for upside risks, the bank adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)

1606 ET - Treasury yields are mixed as markets brace for increased bond buyback. Secretary Bessent announces tougher sanctions on Iran and crude futures fall more than 2%, while remaining close to $90 a barrel and keeping inflation worries alive. The Treasury is reportedly planning to tap its $1 trillion General Account to fund the increased long-term bond buybacks starting next month. The Treasury will auction $69 billion in two-year notes tomorrow. July new residential sales are expected to contract. The 30-year settles down 0.046 percentage point, at 5.230%. The 10-year sheds 0.034 p.p. to 4.703%. The two-year rises 0.002 p.p. to 4.234%. (paulo.trevisani@wsj.com; @ptrevisani)

1448 ET - President Trump's fresh threat to double auto tariffs on Canada targets an important pillar of the U.S.-Canada trade relationship, says Olu Sonola, head of U.S. economics at Fitch Ratings. Trump vows on Jan. 1, 2027 to impose a 50% duty on Canadian-made motor vehicles and on previously-exempt auto parts. Canada supplies 13% of total U.S. vehicles and parts, Sonola says. "The uncertainty alone will strain the highly integrated North American auto supply chain," the economist says. She warns that should Trump follow through with his auto threat, the duties "could force a significant and economically disruptive restructuring of Canada's auto industry, with lasting consequences for its manufacturing base and broader economy." (Paul.Vieira@wsj.com, @paulvieira)

1430 ET - Treasury yields and the dollar rise despite a drop in oil prices accentuated by the U.S. plan to use economic sanctions against Iran. Rising oil prices had been behind a bonds selloff that pushed yields, particularly in the long end, to highs not seen since the financial crisis. But since the Treasury announced plans to buy back more long-dated securities last week, demand for bonds increased somewhat, keeping yields below recent highs. Sticky inflation and rising government debt keep bond investors on their toes, preventing a steeper fall. The WSJ Dollar Index rises 0.2%. The 10-year is at 4.70%, up from an intraday low of 4.68%. (paulo.trevisani@wsj.com; @ptrevisani)

1353 ET - Treasury Secretary Scott Bessent cleared the air to investors on the recent buyback announcement in long-run bonds. When asked whether the Treasury will facilitate more buybacks, Bessent said "We haven't bought a single bond yet. The next time we have an operation is Sept. 9, so we will see on Sept. 9." Treasury yields also retreated Monday after CNBC reported that the Treasury could utilize its General Account to help its long-term bond buyback operations. The 10-year yield is at 4.70% -- while the 2-year yield hovers around 4.24%. (jessica.coacci@wsj.com)

1346 ET - Treasury Secretary Scott Bessent says the department is launching an "economic onslaught" against Iran's global financial connections. Beginning today, actions by the Treasury and other agencies will "tighten the noose" and block every potential source of revenue funding the IRGC, enforcing a "zero leakage" approach. Bessent said new sectoral sanctions target five of Iran's most vital lifelines in other countries: digital assets, technology, gold, aviation and shipping. "I want to emphasize that we are spreading out across the world as we speak...you will see a wave of sanctions when you leave this meeting today, and you should expect that cadence to continue," Bessent said. Markets showed muted initial reaction to the press conference.