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

1050 GMT - The stronger-than-expected tariff cut between U.S. and China suggests a smaller drag expected on China's growth and less demand for policy easing this year, Goldman Sachs analysts write in a note. Goldman Sachs raised its forecasts for China's export volume to remain flat, compared with a previous estimate of a contraction of 5%, citing easing tensions between U.S. and China. Although the path forward for tariffs remain uncertain, China's real exports will likely be roughly flat this year, GS says, raising its 2025 real GDP growth forecast to 4.6% from 4.0% and its 2026 GDP growth forecast 3.8% from 3.5%. That said, given the uncertainties between U.S. and China, the private sector sentiment may remain fragile, they add. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

1035 GMT - More investors considered sterling to be overvalued in Bank of America's global fund manager survey for May. Some 13% of investors think sterling is overvalued, a four-month high. That compares to 8% in the April survey. (renae.dyer@wsj.com)

1034 GMT - Global inflation expectations eased by the most in three years in May, Bank of America's global fund manager survey shows. A net 30% of investors expected global inflation to rise in the next 12 months, down 26 percentage points from April. It marks the biggest decline since May 2022. The survey was conducted between May 2 and May 8, during which the U.S.-China meeting in Geneva was announced.(renae.dyer@wsj.com)

1031 GMT - The proportion of investors who consider the euro to be undervalued jumped in May, according to the latest Bank of America global fund manager survey. The May survey shows 22% of investors say the euro is undervalued, up 17 percentage points since last month and the biggest monthly rise since August 2020. (renae.dyer@wsj.com)

1028 GMT - Investor exposure to the dollar fell to a 19-year low in May, according to Bank of America's latest global fund manager survey. Some 17% of investors are now underweight the dollar, the most since May 2006. The May survey also showed 40% of investors are looking to increase their protection against a weaker dollar. The proportion of investors who consider the dollar to be overvalued is 57%, down 12 percentage points from the April survey and the biggest monthly drop since September 2023. (renae.dyer@wsj.com)

1025 GMT - Investors are less pessimistic about global growth in May, according to Bank of America's monthly global fund manager survey. A net 59% of investors expect weaker global growth, down from 82% in April. A net 1% say a recession is likely, a sharp drop from 42% saying so in April. The consensus among investors is now for a soft landing, where inflation falls without the economy meaningfully slowing or turning to recession. This month, 61% of investors expect this outcome, up from 37% in April. Expectations for a hard landing, where inflation slows amid a recession, have fallen to 26% from 49% in April, BofA says. (emese.bartha@wsj.com)

1014 GMT - Remarks from Bank of England policymakers Megan Greene and Clare Lombardelli on Monday suggest last week's decision to cut interest rates by 25 basis points was a close call, MUFG Bank's Derek Halpenny says in a note. Both said their decision to back the rate cut was finely balanced. The decision came before the U.K.-U.S. trade deal and easing of U.S.-China tensions. "It seems quite likely that if the Monetary Policy Committee meeting had been a week later [Greene and Lombardelli] would have voted to leave the key policy rate unchanged." The BOE voted 5-4 for a 25 basis-point rate cut, with two members preferring to maintain rates and two backing a 50 basis-point cut. (renae.dyer@wsj.com)

0950 GMT - The euro extends gains marginally versus the dollar after a key survey showed German economic sentiment rose by more than expected in May. The ZEW sentiment indicator swung to a positive reading of 25.2 points in May from -14.0 in April. Economists in a WSJ survey expected a reading of 16.4. The current conditions index, however, worsened to -82.0 in May from -81.2 in April against an expected -76.0. The euro rises to $1.1115 after the data from $1.1107 beforehand. (renae.dyer@wsj.com)

0946 GMT - U.K. labor market data shows a slowing in employment numbers and wage growth, but it's not a sign of weakening demand in the U.K. economy and inflation risks remain, Berenberg's Andrew Wishart says in a note. The U.K. unemployment rate rose to 4.5% in January to March, from 4.4% in the previous three months. The deterioration is likely due to reduced hiring activity following an increase in employers' national insurance contributions in April, Wishart says. "The slight fall in employment is likely to be temporary and [could] be followed by higher inflation as companies pass the increase in their wage and tax bills onto customers in the form of higher prices," he says. (miriam.mukuru@wsj.com)

0912 GMT - Investments into the U.S. could increase as trade tensions ease, but the theme of global diversification is more pertinent than ever before, Principal Asset Management's Seema Shah says in a note. "Longer-term, the broader question of the credibility of the U.S. and institutions is unlikely to disappear," she says. In Europe, a shift away from fiscal austerity and a consideration of the benefits of deregulation should raise its long-term economic profile. However, if the U.S. isn't looking to redraw trade lines at the expense of near-term economic strength, there should be renewed confidence in the U.S. as an investment destination, the chief global strategist says. "A key question will be whether the discussions around an end to U.S. exceptionalism now come to a halt."(emese.bartha@wsj.com)

0900 GMT - The latest U.K. labor-market data showed encouraging sings of cooling pay trends for Bank of England policymakers, Deutsche Bank's Sanjay Raja says in a note. There are clear signs of loosening in the labor market even before the double whammy of a hike in the minimum wage and in employer payroll taxes at the start of April, he says. Annual wage growth excluding bonuses slipped to 5.6% in the three months to March, unemployment edged up and vacancies fell. Pay deals will almost certainly slow further and this should keep the BOE's rate-cutting cycle alive, with an acceleration in rate cuts likely later in the year, he says. (edward.frankl@wsj.com)

0857 GMT - Data quality issues surrounding the official U.K. labor market report means sterling traders largely overlooked Tuesday's data release, Monex Europe analysts say in a note. As with other G-10 currencies, U.S. inflation data at 1230 GMT are the main event for sterling, they say. This poses "further downside risks to the pound against the dollar." Speeches from Bank of England chief economist Huw Pill at 0945 GMT and BOE Governor Andrew Bailey at 1600 GMT will also garner attention. Sterling rises 0.3% to $1.3210. The euro falls 0.1% to 0.8412 pounds. The U.K. unemployment rate rose to 4.5% and wage growth excluding bonuses eased to 5.6% in the three months to March, official data showed. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

May 13, 2025 06:50 ET (10:50 GMT)

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