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

1729 ET - An unexpectedly steep drop in births in China doesn't necessarily suggest a corresponding sharp drop in the local market for infant formula, suggests UBS. A2 Milk was heavily soldoff after China said new births fell to 7.92 million in 2025, from 9.54 million a year earlier. A2 Milk's Australia-listed stock dropped 12% on Monday to a five-month low. UBS said the market hadn't anticipated such a steep drop in births in China, projecting a result somewhere in a range of 8.5 million-9.0 million. "Industry feedback on Stage 1 & 2 (0-12 months) infant formula (IF) sales in 2025 suggests only a modest decline in new users potentially due to greater IF use with a shift to lower tier cities," analyst Marcus Curley says. "Marriage data also points to a recovery in 2026." UBS has a neutral call on A2 Milk. (david.winning@wsj.com; @dwinningWSJ)

1118 ET - The New Zealand dollar could recover against the Swedish krona as the Reserve Bank of New Zealand is likely to raise interest rates more than Sweden's Riksbank this year, HSBC analysts say in a note. HSBC expects the RBNZ to deliver two 25 basis-point rate rises in the second half of 2026 versus one rate rise for the Riksbank. Moreover, the bank questions whether the krona can continue rising at such a strong pace. The New Zealand dollar by contrast "has recently lagged in the G-10 space" despite recent strong data, such as third quarter GDP. The New Zealand dollar rises to a 3-week high of 5.3420 Swedish kronor, LSEG data show. (renae.dyer@wsj.com)

1115 ET - President Trump's threat to impose tariffs on some European countries over his desire to acquire Greenland could mean now is a good time to buy protection against falls in corporate bonds via credit default swaps, Danske Bank analysts say in a webinar. Credit is typically driven by fundamentals rather than politics, but spreads are so low that they could easily widen if geopolitical concerns impact markets. A tail risk event--one which has a low probability but would have a substantial impact on financial markets--could have a significant impact on credit markets with spreads at such low levels, they say. The iTraxx Europe Crossover index of euro-denominated high-yield CDS hit a one-month high of 248 basis points on Monday, S&P Global Market Intelligence data show. (jessica.fleetham@wsj.com)

1112 ET - The Norwegian krone's gains against the euro so far this month are likely to be temporary, Danske Bank's Kristoffer Kjaer Lomholt says in a note. Important economic growth drivers from oil investments and petroleum industries are fading while the central wage negotiation framework has created persistently high unit labor costs, he says. The Norges Bank left rates unchanged in December but indicated one to two rate cuts in 2026. Danske expects three cuts in 2026 and a total of four quarterly rate cuts starting in June and ending next March. It sees the euro rising to 12.30 krone in 12 months from 11.7081 currently. (renae.dyer@wsj.com)

1110 ET - European credit investors are exercising caution due to the threat of U.S. tariffs, ING's Jeroen van den Broek and Timothy Rahill say in a note. "The market remains in 'wait-and-see' mode with tight valuations and still strong demand." Credit spreads risk widening due to uncertainty around U.S. trade policies, they say. The comments come after President Trump said he would impose tariffs on several European countries for opposing his plan to acquire Greenland. (miriam.mukuru@wsj.com)

1100 ET - European banks increase their issuance of bonds as strong demand for credit assets prompts more supply, ABN Amro strategists say in a note. A need to refinance is the main driver for bond issuance, they say. Euro-denominated bank bond supply since so far in 2026 is equal to around 70% of the total supply in January 2025, the strategists say. (miriam.mukuru@wsj.com)

1100 ET - The U.S. term premium--or the extra compensation investors demand for holding longer-duration bonds--looks too low, Pictet Asset Management's Christopher Preece and Arun Sai say in a note. The risk is that a U.S. policy mistake causes a selloff in longer dated Treasurys, driving yields higher, investment manager Preece and senior strategist Sai say. "Our base case is for U.S 10-year Treasury yields to stay below 5%, but higher yields remain a significant tail risk," they say. U.S. Treasurys will remain a core part of global portfolios, but with U.S. foreign policy in flux it makes sense to hedge this exposure, they say. Allocation to gold is an option, which is also a natural hedge against the dollar. (emese.bartha@wsj.com)

1039 ET - The Canadian dollar has lagged other G-10 peers recently but this looks unjustified given its solid fundamentals, HSBC analysts say in a note. The Canadian economic activity and inflation data continue to exceed expectations, they say. This warrants an increase in its implied rate path in overnight index swaps. "Recent escalation in geopolitical risk that results in a floor under oil but continued rallies in risk assets make the currency stand out given its positive correlation with oil yet strong correlation to movements in equity markets." HSBC expects the U.S. dollar to fall to 1.35 Canadian dollars in the first quarter, from 1.3867 currently.(renae.dyer@wsj.com)

1036 ET - Bank of Canada officials next week will likely judge that underlying inflation is starting to run closer to 2% than previous assessments that it was around 2.5%, Citi's Veronica Clark says. While that isn't enough to have policymakers considering resuming interest-rate cuts just yet, recent inflation data should at least substantially reduce the chance of rate increases this year, Clark says. Further slowing in inflation, which forward-looking demand metrics indicate, should have officials considering rate cuts again later this year, the economist adds. (robb.stewart@wsj.com; @RobbMStewart)

1026 ET - New issue premiums on euro-denominated credit--or the extra yields investors demand for buying new bonds--are low despite heavy supply of euro bank bonds, ABN Amro strategists say in a note. Strong appetite for bank bonds has led to low new issue premiums, they say. "Investors allocating capital to euro-denominated bonds should not expect substantial new-issue concessions," they say. (miriam.mukuru@wsj.com)

1024 ET - With Canadian headline inflation a little stronger than expected in December but measures of core inflation softer on average, the latest CPI report is unlikely to affect Bank of Canada policy heading toward next week's meeting, CIBC Capital Markets' Andrew Grantham says. Indeed, the economist continues to expect the bank's overnight rate will be on hold throughout this year. Bond yields were little changed by the data, which did little to change market expectations for Bank of Canada policy setting, Grantham says. (robb.stewart@wsj.com; @RobbMStewart)

1016 ET - President Trump's vow to impose tariffs against several European nations poses a threat to the euro, Danske Bank analyst Mohamad Al-Saraf says in a note. Any escalation in geopolitical tensions and/or renewed euro-area weakness are key risks to Danske's forecast for the euro to strengthen against the dollar over the medium term, he says. For now, the bank still sees the euro rising to $1.23 in 12 months from $1.1632 currently as it expects the Federal Reserve to deliver two additional interest rate cuts this year while the European Central Bank keeps rates unchanged. Danske sees additional euro support from a recovering European asset market, fading confidence in U.S. institutions and investors taking increased protection against a weaker dollar. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

January 19, 2026 17:29 ET (22:29 GMT)

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