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

0952 GMT - Any loosening in fiscal policy by a new U.K. prime minister will probably only be modest, meaning Keir Starmer's replacement might not be much more successful at boosting growth, Capital Economics' Ruth Gregory says in a note. Andy Burnham and other hopefuls have made it clear they want to spend more. The most likely result is that there will an increase in the size of the state, with more taxes on capital and wealth and more spending on big investment projects like social housing and social care, plus more borrowing, Gregory says. But the key constraints are perceptions of fiscal prudence in markets and the political cost of keeping inflation and interest rates higher than otherwise. "In other words, a change in prime minister won't change the fiscal realities," she says. (edward.frankl@wsj.com)

0950 GMT - U.S. Treasury yields rise while the dollar is stable as markets continue to bet on the prospect of tighter monetary policy by the Federal Reserve. At the same time, attention will also remain focused on the diplomatic talks between the U.S. and Iran, with both countries aiming at reaching a final agreement within 60 days, Exness' Li Xing says in a note. "Progress toward a deal could reduce demand for safe-haven assets and weigh on the dollar. However, caution could remain given the numerous setbacks that have characterised the negotiations in recent months," Xing says. The dollar is steady at 100.86. The 10-year Treasury yield rises 3.8 basis points at 4.489%, according to Tradeweb. (emese.bartha@wsj.com)

0935 GMT - The ECB is expected to reach a 3% deposit rate, but only by mid-2029, Holger Schmieding at Berenberg says in a note. The brokerage previously forecast that this level would be reached in 2028. With the U.S-Iran deal bringing energy costs down, eurozone headline inflation is likely to be pulled below 2% in early 2027. This means the ECB could delay tightening rates until late 2028. At this point, Europe's ageing population is expected to begin shrinking labor supply faster than demand, driving up wages and forcing the central bank to hike rates, Schmieding says. "Despite a serious risk that the ECB may still raise rates again in July or September 2026...the bank will not go further than that before 2028." (don.forbes@wsj.com)

0935 GMT - The euro is at risk of falling below $1.14 in the near-term as expectations the Federal Reserve could raise interest rates boosts the dollar, ING's Francesco Pesole says in a note. "At the same time, positive headlines from the U.S.-Iran negotiations suggest the depth of the next leg lower should be more limited; the commodity terms of trade for the eurozone have recovered more than half of the initial war-related drop." Market pricing on LSEG implies the Fed could raise rates in September as last week's meeting signalled the prospect of tightening this year. The euro falls 0.1% to $1.1458 after hitting a three-month low of $1.1416 Friday, according to LSEG. (renae.dyer@wsj.com)

0932 GMT - U.K. government bonds, or gilts, and sterling could experience increased volatility in the coming months due to an uncertain U.K. fiscal outlook, eToro's Lale Akoner says in a note. Investors lack clarity on the future government spending plans after Prime Minister Keir Starmer stepped down on Monday. "For now, markets are pricing political uncertainty rather than specific policy risks," Akoner says. New fiscal measures are likely to emerge at the next budget, which could keep sterling and gilts vulnerable to speculation about future spending plans and tax measures, she says. Ten-year gilt-yields trade flat at 4.838% while sterling falls 0.1% to $1.3219, Tradeweb data show. (miriam.mukuru@wsj.com)

0926 GMT - The timeline and process for selecting a successor to U.K. Prime Minister Keir Starmer is more important for sterling than Monday's news of his resignation, Convera strategist George Vessey says in a note. Markets had largely priced in Starmer's departure, limiting the market reaction to the announcement. Andy Burnham is the favorite to replace Starmer and markets seems relatively comfortable with that for now, he says. However, political uncertainty could re-emerge if investors begin to question Burnham's commitment to fiscal discipline, he says. "In that scenario, it is not difficult to envisage 10-year gilt yields testing the 5% level again and sterling sliding below $1.30." Sterling falls 0.1% to $1.3219. The 10-year gilt yield is unchanged at 4.839%. (renae.dyer@wsj.com)

0912 GMT - Sterling faces further potential falls due to uncertainties around fiscal policy after Prime Minister Keir Starmer resigned, Monex Europe analysts say in a note. Andy Burnham is the favorite to replace Starmer after his victory in a special election last week. "Changing the person in charge does nothing to solve the U.K.'s fiscal challenges, and we are yet to hear anything from Burnham that convinces us that he has a more credible plan than the current government," the analysts say. Nevertheless, sterling's near-term fortunes rest on who will be Treasury chief. Former health secretary Wes Streeting is a possible candidate that could provide some market relief, they say. Sterling falls 0.2% to $1.3204. The euro rises 0.1% to 0.8669 pounds. (renae.dyer@wsj.com)

0901 GMT - The tech sector is propelling both the Chinese economy and the equity market, Goldman Sachs says in a research note. "Although policymakers have shown some concerns over the latest weakness in consumption growth, policy signals still point to unwavering support for tech and AI," GS says. For example, the National Bureau of Statistics touted China's technological advances in areas such as optical quantum computing during its press conference after the May data release, GS notes. Meanwhile, even though the Shanghai Composite Index has been largely flat year to date, the IT sector index has rallied by over 50%, GS adds. (tracy.qu@wsj.com)

0900 GMT - Sterling stays lower after U.K. Prime Minister Keir Starmer announced he would resign. The move was widely expected as Starmer faced pressure from Labour lawmakers to make way for Andy Burnham to replace him, according to media reports. Burnham won a special election last week, creating a path for him to enter a leadership contest. Sterling falls 0.3% to $1.3194 and the euro rises 0.1% to 0.8673 pounds, both little changed from levels before the announcement. (renae.dyer@wsj.com)

0857 GMT - Yields on U.K. government bonds stay higher after U.K. Prime Minister Keir Starmer announced his resignation on Monday. Uncertainty about U.K.'s political and fiscal outlook are causing investors to add a risk premium on U.K. government bond yields. Gilt yields could stay elevated in the coming months due to concerns about the risk of higher public spending under a new leader, Pantheon Macroeconomics economists say in a note. Ten-year gilt yields rise 0.8 basis points to last trade at 4.848%, Tradeweb data show. (miriam.mukuru@wsj.com)

0844 GMT - Global bonds are expected to decouple from oil prices and from each other, Capital Economics says in a note. The head of Asia-Pacific markets Thomas Mathews says, despite renewed U.S.-Iran tensions over the weekend initially threatening to unsettle markets, sentiment has improved slightly after encouraging comments from Iranian negotiators. For bond markets, the big picture remains that the ceasefire in the Iran war and last week's hawkish Fed commentary are driving U.S. Treasuries away from crude oil price movements. CE says as long as tensions between the U.S. and Iran don't re-escalate, domestic macro drivers, rather than oil price swings, will once again become the key influence on global markets. (jason.chau@wsj.com)

0826 GMT - China is likely to speed up fiscal spending in the near term, according to Goldman Sachs in a research note. The pace of fiscal spending slowed significantly in March and April after January-February activity data beat expectations, GS says. Combining the general public budget and government-managed fund budget, total government expenditure dropped from a growth of 6.1% on year in January-February to a decline of 7.3% on year in April, they say. The pace of government bond issuance and fiscal spending is likely to accelerate in the coming months as April and May activity data have disappointed, GS says. (tracy.qu@wsj.com)

(END) Dow Jones Newswires

June 22, 2026 05:52 ET (09:52 GMT)

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