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

0739 GMT - China may deploy more policy support to boost consumption, including the possible rollout of a long-anticipated childcare subsidy, Citi economists write in a note. Investors are looking for more policy clues in the upcoming Politburo meeting later this month, the analysts add. An austerity rule implemented in May restricting public servants from dining out in a push to cut down on lavish spending has had a chilling effect on consumption into the summer, Citi says. The policy led to an obvious slowdown in restaurant revenue, as well as tobacco, beverage and alcohol sales in June, Citi says. The bank projects the rule to drag 2H retail sales growth down by 0.6 percentage point. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

0729 GMT - Volvo Car operating profit and margins came in slightly above expectations excluding restructuring and impairments, while free cash flow also exceeded expectations, Kepler Cheuvreux analyst Alexandre Raverdy writes. Sales fell by around 8%, but still landed above consensus as it benefited from a one-off boost related to the sale of inventory in the U.K. "We believe that the share will react positively to the report." Against a backdrop of the very challenging climate, Volvo Car continues to focus on cost and cash flow discipline in line with its plan to save 18 billion Swedish kronor, Raverdy says. The group confirmed that it will introduce local production of the XC60 SUV model in the U.S. to avoid tariffs. Shares rise 9%. (dominic.chopping@wsj.com)

0726 GMT - Japan's economic outlook appears extremely difficult, Stefan Angrick at Moody's Analytics says after exports data painted a grim picture of the impact of U.S. tariffs. Even if Japan strikes a deal to ease some of the harsher duties, a complete return to pre-Trump conditions seems unlikely, the economist reckons. Attempts to boost U.S. commodities imports or relax curbs on U.S.-made goods haven't yielded tariff relief. Japan's status as the largest foreign investor in the U.S. hasn't won it any favors in Washington either. Adding to the poor outlook is the government saying it can't afford to support Japan's economy. The administration has promised half-hearted aid for households but lacks a strategy to find homemade sources of growth as export-driven ones weaken, Angrick says. (fabiana.negrinochoa@wsj.com)

0723 GMT - The U.K. labor market is loosening but the Bank of England will need to stay cautious about easing its policy, Deutsche Bank's Sanjay Raja tells investors in a note. Data on Thursday show a fall in vacancies, a rise in unemployment and a slowing of wage growth. Joblessness will continue to rise, but at a slow pace, Raja says. That means the BOE can continue to lower interest rates, but in a gradual and careful way, he says."We do not think that the bar for faster rate cuts has been met just yet," Raja says. (joshua.kirby@wsj.com; @joshualeokirby)

0720 GMT - Citi expects that the European Central Bank will leave rates on hold this month and will instead cut interest rates in September. It had previously expected a reduction at next week's meeting. Citi continues to forecast two more ECB rate cuts, but the timing is now expected to be September and December, rather than July and September as it had expected previously, its strategists say in a note. Eurozone money markets aren't pricing a high chance of a rate cut until December, LSEG data show. (emese.bartha@wsj.com)

0719 GMT - U.S. corporate earnings in 2Q could be lifted by a weaker dollar, HSBC analysts say in a note. Roughly 30% of S&P 500 revenue is generated overseas, but for the tech sector, that figure is significantly higher at around 55%, the analysts say. A weaker dollar boosts earnings for U.S. companies with global revenue as that implies more dollars obtained per unit of foreign currency. On the flip side, for European companies, a weaker U.S. dollar is an earnings headwind, the analysts say. Recent euro strength will shave 5 percentage points off 2Q EPS for European companies, marking the largest currency drag since 2020, HSBC says. (tracy.qu@wsj.com)

0709 GMT - The Bank of England looks set to cut interest rates next month, MHA economic adviser Joe Nellis says, as data show wage growth continues to lose pace in the U.K. Average pay increased 5% in the three months to May, decelerating from a rise of 5.3% in the previous period, figures show Thursday. Unemployment also reached its highest since 2021, highlighting the cracks emerging in the U.K. jobs market. "With this inflationary pressure cooling, the [BOE's] Monetary Policy Committee is likely to vote to cut interest rates when it next meets on Aug. 7," Nellis writes in a note. (joshua.kirby@wsj.com; @joshualeokirby)

0652 GMT - Sterling edges higher versus the euro, while remaining weaker against a firmer dollar after U.K. jobs data. The unemployment rate unexpectedly crept up to 4.7%, the highest since 2021, though employment rose. Wage growth eased but stayed high, with average weekly earnings growth excluding bonuses at 5.0% in the three months to May. This could still concern policymakers at the Bank of England after data Wednesday showed inflation rose by more than expected in June. Wealth Club's Nicholas Hyett says the rise in both employment and unemployment could be confusing for policymakers, while these data are known to be unreliable. The euro falls 0.2% against the pound to 0.8653, from 0.8673 earlier. (jessica.fleetham@wsj.com)

0622 GMT - The U.S. dollar recovers, having dipped sharply on Wednesday. The weakness followed reports that a dismissal of Federal Reserve Chair Jerome Powell was imminent. However, the dollar turned higher after Trump said that a firing was "highly unlikely." The DXY dollar index rises 0.2% to 98.591, having dropped to 97.714 on Wednesday. The euro falls 0.3% to $1.1599, having hit a high of $1.1721 Wednesday, LSEG data show. (emese.bartha@wsj.com)

0613 GMT - Indonesia's tepid growth, low inflation and a relatively more stable rupiah provide the central bank with opportunities for a deep rate-cutting cycle, say economists at HSBC Global Research in a note. Inflation isn't a major worry, with Bank Indonesia expecting price increases to remain in the 1.5%-3.5% target range over 2025 and 2026, say Pranjul Bhandari and Aayushi Chaudhary. The rupiah may remain stable on capital inflows. Following the trade deal with the U.S., BI expects stronger growth in 2H, led by higher exports. HSBC continues to expect a further 75 bps worth of rate cuts until March 2026, spread across 50 bps of cuts in 4Q 2025 and 25 bps in 1Q 2026. "With 100bp in easing already done, another 75bp would make this a deep rate-cutting cycle," HSBC says. (monica.gupta@wsj.com)

0600 GMT - A new trading range for 10-year German Bund yields seems to be emerging, Commerzbank Research's Hauke Siemssen and Erik Liem say in a note. This range is between 2.67% and 2.73%, where the 10-year Bund yield has been trading most of the time in recent days. "We suggest trading this range for now given the thin data calendar and the start of the European Central Bank quiet period from today," the rates strategists say. The ECB's next policy decision is on July 24. The 10-year Bund yield closed at 2.690% on Wednesday, down 1 basis point, according to Tradeweb. (emese.bartha@wsj.com)

0545 GMT - Malaysia's exports likely rebounded in June, recovering from May's contraction, according to the median estimate of six economists polled by The Wall Street Journal. Exports are estimated to have risen 6.5% on year compared with the 1.1% contraction in May. Imports likely rose 10.4%, leading to a trade surplus of 10.9 billion ringgit. Export growth likely rebounded in June due to a low base from last year, Barclays economists say in a note. However, a strong ringgit may also not be favorable to the country's export receipts, says Kenanga IB economist Muhammad Saifuddin Sapuan. The trade data are due Friday. (yingxian.wong@wsj.com)

(END) Dow Jones Newswires

July 17, 2025 03:39 ET (07:39 GMT)

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