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

1323 ET - An expected Fed hike is more likely to solidify the central bank's independence from politics than to significantly curb inflation, Diamond Hill's Henry Song says. "I'm still trying to work out whether Chairman Warsh wants to be going head-to-head with the president this early in his tenure." Song will be watching for indications of whether a hike would be a one-off or the beginning of a cycle. He says a hold could be justified by macro indicators, but it could be interpreted as Warsh bending under political pressure, in which case long-term yields would rise. Futures markets price 93% odds of a hike, according to CME. (paulo.trevisani@wsj.com; @ptrevisani)

1251 ET - The crypto-friendly Clarity Act is officially dead in Congress after falling short yesterday on a vote to push the bill to a floor debate, StoneX analyst Mark Palmer says in a note. That means the uncertainty that has lingered over much of the crypto space isn't going away, he says. Altcoins and decentralized finance protocols, which got hit the hardest under the previous SEC administration, are going to be impacted by the bill's defeat the most, Palmer says. But that doesn't mean the industry's growth will grind to a halt, he says. The work that Congress didn't finish now falls to the SEC and CFTC to sort out, which they have been preparing for, Palmer says. (dean.seal@wsj.com)

1240 ET - The SEC isn't shying away from crypto regulation, even after the failure of a key bill that would have set the first comprehensive regulatory framework for digital assets. "With or without legislation, we will act decisively within the SEC's statutory authority to deliver certainty for American investors and for the entrepreneurs shaping our technological future," SEC Chair Paul Atkins says in a post to X. The Clarity Act, which would have helped usher digital assets into the mainstream financial system, fell short of the votes required to advance in Congress in a Tuesday vote. (kelly.cloonan@wsj.com)

1139 ET - Uncertainty in bond markets calls for allocation in short-duration assets with appealing yields, Diamond Hill's Henry Song says. He expects today's Fed decision to have little impact on war-driven inflation, keeping the outlook cloudy. Treasury Secretary Bessent's effort to control long-term yields are also futile as markets "have called his bluff," Song says. Song's strategy is to buy "a lot of short-duration assets that's very yieldy right now" and be nimble. If rates really go higher, he can redeploy the cash when bonds mature. "It's kind of this dance of trying to maintain the yield in the portfolio at the same time giving ourselves future flexibility." (paulo.trevisani@wsj.com; @ptrevisani)

1105 ET - The Federal Reserve could dampen rate-rise expectations in its decision at 1800 GMT, although any dollar selloff is likely to prove limited, Rabobank's Jane Foley says in a note. The Fed should lift rates by 25 basis points but risks are skewed towards the central bank undermining the market's conviction on rate increases going forward as too much policy tightening is priced into next year, she says. While the dollar could fall in the near-term, it's unlikely to come under heavy selling pressure given issues elsewhere including the U.K.'s limited fiscal headroom and the eurozone's energy importer status, she says. Rabobank expects the euro to trade near $1.16 in one to three months, compared to $1.1535 currently. (renae.dyer@wsj.com)

1038 ET - Equity markets have historically been able to weather the transition to fiscal tightening after a prolonged pause in rate changes, LPL Financial's Adam Turnquist says in a note. In fact, outcomes have been especially favorable when the Federal Reserve cut rates before the pause, he says. In those instances, the S&P 500 delivered an average return of 7.8% in the 12 months after the first post-pause rate hike, compared with 0.8% for pauses preceded by a rate hike, Turnquist says. The Fed cut rates back in December before this latest round of holding rates steady, which is expected to end with a rate hike later today. (dean.seal@wsj.com)

1030 ET - In August, the typical renter paid $1,066 less per month than the typical home buyer, according to Zillow. Rent was $1,948 while the typical mortgage payment plus taxes and insurance totaled $3,014--a gap that has grown as mortgage costs have risen faster than rents. For renters who can set that difference aside, it could translate into meaningful long-term savings. At $1,066 a month, renters save $12,792 a year over owning a home, and those who invest it at the rate of the 10-year Treasury yield earn an additional $322 in the first year alone. Assuming rents and home buying costs remain stable, that could turn into a cumulative total of $72,000 after five years--real wealth built without the hidden costs of homeownership like closing costs, maintenance and more. (chris.wack@wsj.com)

0947 ET - EC President Ursula von der Leyen's plan for Canada to become an associate member of the EU confirms recent WSJ reporting. But, Bank of Nova Scotia economist Derek Holt is tamping-down any excitement over this development. "We have no clear idea what that means," Holt tells clients in a note. He adds the EU's 27 members would have to be onside. That is a daunting task, with Holt noting that at least 10 European parliaments, such as France and Ireland, have yet to ratify the EU-Canada trade pact negotiated last decade. Holt predicts that "President Trump will have become history" by the time the EU and Canada might figure out what this associate membership looks like. (Paul.Vieira@wsj.com; @paulvieira)

0940 ET - Canada PM Mark Carney is fighting back against hefty US tariffs with a notable tax cut that could improve profitability for Canadian transportation, energy, mining and construction companies, says Rosenberg Research economist Robert Embree. The cut applies to Canada's marginal-effective tax rate, which is the levy companies pay on each additional dollar of business investment. Embree says Canada's marginal-effective tax rate is now reduced to 6.4%, or a faction of the US rate. He says the near-term growth implications are positive but modest, noting gains will be offset by the negative drag from US tariffs. Embree adds this move will be "modestly positive" for Canada stock indexes, with stronger earnings in the offing for industrials, materials and energy. (Paul.Vieira@wsj.com; @paulvieira)

0927 ET - The Bank of England's strategy of delaying interest-rate rises could start to weigh on sterling, Deutsche Bank's Shreyas Gopal says in a note. This strategy has so far helped keep sterling stable as it's an appropriate response to a supply-driven inflation increase and in the context of still mildly restrictive monetary policy and uncertainty over the labor market trajectory, he says. The BOE could vote 6-3 to leave rates steady and leave forward guidance largely unchanged Thursday, which is unlikely to be sufficient to prevent some sterling weakness, he says. Sterling's yield advantage against the euro is starting to narrow as the European Central Bank raises rates, he says. The euro rises 0.1% to 0.8571 pounds. (renae.dyer@wsj.com)

0925 ET - The stakes of closer EU ties could be significant for Canada, says Claus Vistesen at Pantheon Macroeconomics. Preferential access to the EU could come with the trade-off of having to align more closely with European regulations, he says. "The EU is a rule setter. The cost of that preferential access isn't just going to be tariff-free." Realigning the way Canada does business could also generate further friction with the U.S., its closest trading partner, Vistesen says. "No matter what happens, you're still going to be trading a fraction with Europe of what you're trading with America, just because of the gravity, the proximity," Vistesen says, adding that there could be considerable backlash in Canada to a close free-trade agreement with the EU. (don.forbes@wsj.com)

0921 ET - The dollar could gain if elevated energy prices support expectations for interest-rate rises across the G-10, HSBC strategist Daragh Maher says in a note. In this scenario, currencies should respond more to their exposure to the energy price shock rather than rate expectations, he says. "On that basis, the dollar could benefit from the U.S. economy's greater energy self-sufficiency and resilience relative to more import-dependent economies, particularly the eurozone and the U.K."