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

1041 ET - The Eurpopean Central Bank is likely to hike rates at least once by the end of this year, while the pace and timing of these hikes will hinge on the duration of the conflict in the Middle East, Aberdeen Investments' Felix Feather says in a note. The ECB's emphasis on upside risks to the inflation outlook and a 0.7 percentage-point upward revision to 2026 base-case inflation forecasts "hint at the bank's concern over renewed inflationary pressure, and its willingness to respond with hikes," the economist says. The focus at Thursday's ECB decision, where it kept rates on hold as expected, was always going to be more about its signal for how it might react in future, he says. (emese.bartha@wsj.com)

1029 ET - The yield curve has flattened substantially in the past month, a sign traders may be growing more concerned that the Fed's two goals are increasingly at odds. The 10-year Treasury yield is now trading about 43 basis points above the 2-year yield. That is down from about 75 basis points in mid-February and one of the smallest spreads since last spring. An inverted yield curve--a negative 2s-10s spread--is Wall Street's classic harbinger of a coming recession. We're not there yet. But the flattening seen in recent weeks accelerated sharply after Wednesday's Fed meeting. It's evidence that traders increasingly believe that inflation will limit Fed's bandwidth to respond to economic fragility by cutting rates--which could come at the expense of future growth. (matt.grossman@wsj.com; @mattgrossman)

1023 ET - The typical U.S. home that went under contract in February spent 66 days on the market, the slowest winter pace in 10 years and up from 58 days a year earlier, Redfin says. Homebuyers are taking their time as spring approaches, which is usually the busiest season for the housing market. But the war in Iran, skyrocketing gas prices and other economic jitters are making homebuyers nervous, Redfin says, adding that it's a buyer's market, with sellers outnumbering buyers by more than 40%. It means the buyers who are in the market have negotiating power and can afford to take their time. The typical homebuyer in February paid 1.8% less than the final list price, the largest discount for this time of year since 2023. The median home sale price was $429,259, up 0.9% from a year earlier, Redfin says. (chris.wack@wsj.com)

1022 ET - The ECB faced criticism in 2022 for acting too slowly amid of rising inflation, a mistake it won't be in a hurry to repeat, says Joe Nellis at MHA. The central bank voted to hold interest rates Thursday. But with energy prices soaring, a hike could yet be in store. "A return to monetary tightening would be unwelcome for an already fragile eurozone economy." The IMF already lowered it outlook for the bloc, which would likely fall even lower if rates are raised, Nellis says. But snowballing energy prices could force the bank's hand. "Aware that they faced criticism in 2021-22 for not acting quickly enough to calm what they saw as 'transitory' inflationary pressures, policymakers at the ECB will not risk acting too slowly this time," Nellis says. (don.forbes@wsj.com)

1008 ET - The typical homebuyer would save $150 per month taking out an adjustable-rate mortgage instead of a 30-year fixed rate mortgage, according to Redfin. That's a 5.8% discount, the biggest ARM users have had since June 2022 in both dollar and percentage terms. That's because the average homebuyer using an ARM so far in March took on a 5.51% rate, while the average buyer taking out a fixed mortgage had a 6.19% rate. The ARM is 0.68 basis points lower, the biggest gap since June 2022. The typical monthly payment for a homebuyer using an ARM is $2,578, versus $2,727 for someone using a fixed rate. Mortgage rates are lower than they were a year ago, but rates for ARMs have declined more: Today's average rate for an ARM, 5.51%, while the average 30-year fixed rate is now 6.19%. (chris.wack@wsj.com)

1003 ET - The ECB's statement alongside its decision to hold rates suggests that policymakers think that the inflationary effects of higher energy prices will outweigh the disinflationary effects of weaker economic growth, Capital Economics' Jack Allen-Reynolds says. Should energy prices keep rising, the balance of opinion could shift towards getting on the front foot by hiking in of April, and perhaps by as much as 50 basis points, he says in a note. If oil and natural-gas prices remain close to their current levels, headline inflation could rise above 3% by April and above 4% in the summer, Allen-Reynolds notes. "We doubt that the ECB would 'look through' a shock that size," he says. (edward.frankl@wsj.com)

1001 ET - The European Central Bank became the seventh central bank to announce unchanged rates in the last 24 hours, acting cautiously in face of the uncertainty stoked by the energy crisis, Premier Miton Investors' Neil Birrell says in a note. "Uncertainty abounds, with spiking energy prices fuelling inflationary fears," the chief investment officer says. "Markets are reacting to these rising risks, and central banks must do so too." Central banks have no choice but to be cautious in approach, the problem being that growth is now a real risk, as recognised by the ECB in their statement, he says. "The outlook is grim at the moment, with no immediate resolution in sight." (emese.bartha@wsj.com)

1000 ET - Mortgage rates are bouncing back up and home-sale prices are rising, Redfin says. The weekly average mortgage rate rose to 6.11% last week, the highest level since the start of 2026, as inflation jitters and the war in Iran rattled markets. The daily average mortgage rate jumped higher, to a six-month peak of 6.41% on Friday, and has since dropped slightly to 6.31%, Redfin says. The median U.S. home-sale price was $387,000 during the four weeks ending March 15, up 1.3% year-over-year, according to Redfin. The median monthly payment is $2,649, which is down 2.7% year over year but the highest it has been in nine months, Redfin says. New listings are up 1.2%, the second straight week of increases after four months of declines. (chris.wack@wsj.com)

1000 ET - Unless inflation expectations trend significantly higher from here, the bar for a Bank of England interest-rate hike remains high, Quintet's Daniele Antonucci says in a note. The dataflow in the next few weeks will be crucial, as the situation for energy prices remains fluid and highly uncertain, he says. "Despite weak domestic growth, the dominant concern is that inflation expectations could de-anchor," he says. Wage rises are easing, but not enough to offset the renewed price pressures coming through from the Iran war. "The next policy meeting could take place against a significantly changed backdrop if energy markets continue to be disrupted," Antonucci says. (edward.frankl@wsj.com)

0956 ET - Interest-rate hikes are now a real risk for the U.K. economy, Deutsche Bank's Sanjay Raja says in a note. The message from the Bank of England as it held rates was that it will guard against rising inflation expectations should it lead to more persistent price pressures, he says. Should energy prices stick at current levels, policymakers could be forced into pushing rates higher to curb inflation, which bank staff now see inflation at 3%-3.5% over the coming quarters, Raja says. "The probability of hikes will have risen meaningfully following today's decision with all members noting that they will know more by the April decision," Raja says. (edward.frankl@wsj.com)

0953 ET - Weakness in the U.K. labor market makes the current energy shock different from that seen in 2022, says Jessica Hinds at Fitch Ratings in a note. Persistently-high unemployment is likely to keep a lid on inflation and allow the Bank of England to ease its key rate towards 3%, Hinds says. "On the assumption that the oil price spike is relatively short lived, we would continue to think that the next move will be a cut, not a hike," she says. The central bank kept rates unchanged on Thursday. It indicated that a prolonged shock could prompt more restrictive policy, but that a weaker economy could warrant cuts. "Nevertheless, the risk to our view is that the uncertainty will encourage policymakers to be more cautious in their approach to loosening policy," Hinds says. (don.forbes@wsj.com)

0950 ET - Eurozone government bond yields remain higher after the European Central Bank left policy rates unchanged, as expected. The ECB warned about a "material impact" of the Middle East conflict on inflation. "The Iranian war has certainly made decisions more difficult for the ECB," says Aviva Investors' Ed Hutchings. "With growth indicators already beginning to pick up ahead of this, the ECB could well be more on the front foot in addressing any unwanted inflationary fallouts," the head of rates says. The 10-year German Bund yield is up 3.9 basis points on the day at 2.987% after the decision, edging down from around 2.995% beforehand, Tradeweb data show. The euro rises briefly to $1.1504 before dropping back to $1.1482, up 0.3% on the day. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

March 19, 2026 10:41 ET (14:41 GMT)

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