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

0940 GMT - Sterling could fall as the Bank of England looks set to leave interest rates unchanged Thursday while fiscal uncertainty persists, Monex Europe analysts say in a note. Monex expects another 7-2 vote in favor of keeping rates at 3.75% with Megan Greene and Huw Pill again preferring a rate rise. Risks are skewed towards a larger minority favoring a rate rise or BOE Governor Andrew Bailey hinting at tightening in the fall, the analysts say. "Failing that, with fiscal uncertainty under Prime Minister Andy Burnham still weighing on the pound, we retain a modest downside bias for sterling." Sterling rises 0.1% to $1.3332 against a weaker dollar but falls 0.2% against the euro at 0.8546 per euro. (renae.dyer@wsj.com)

0938 GMT - Markets should expect a low-growth, high-inflation global environment after the U.S. imposed new tariffs on key trading partners last week, CG Asset Management's Emma Moriarty says in a note. The U.S. on Friday announced new tariffs on 60 trading partners including the European Union and China. The tariffs take effect against a backdrop of a global energy shock and increased supply-chain disruptions, Moriarty says. (miriam.mukuru@wsj.com)

0938 GMT - U.S. Treasury yields fall and the dollar retreats as markets react to an easing in the Middle East tensions, as President Trump's pause of strikes on Iran cause oil prices to slide. "The apparent de-escalation dragged oil prices lower, tempering inflation concerns," says Tapaas' Jonathan Squires in a note. "A sustained decline in crude prices could further ease inflationary pressures and soften monetary policy expectations." On Wednesday, the Federal Reserve is expected to keep rates on hold, although markets anticipate a hike in September, according to LSEG. The 10-year Treasury yield falls 4.3 basis points to 4.636%, according to Tradeweb. The DXY dollar index falls 0.2% to 101.264. (emese.bartha@wsj.com)

0930 GMT - The Japanese yen faces further potential weakness unless the Bank of Japan provides "hawkish" signals about future interest-rate rises when it announces its next policy decision on Friday, MUFG Bank's Lee Hardman says in a note. The BOJ is expected to leave rates steady but market participants will be watching closely for any hints about future tightening following media reports that the central bank is open to a faster pace of rate rises. The yen could fall in the absence of such guidance, particularly if the Federal Reserve raises rates on Wednesday, he says. The dollar falls 0.2% to 163.53 yen, having reached a 40-year high of 163.98 last Thursday, LSEG data show. (renae.dyer@wsj.com)

0923 GMT - The cost of insuring euro-denominated credit against default declines as market sentiment improves after the U.S. and Iran pause hostilities. The pause has offered relief to markets and reduced the possibility of a near-term escalation in the conflict, Tickmill Group's Patrick Munnelly says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 8 basis points to 258bps, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0916 GMT - The Bank of England is expected to leave interest rates unchanged at 3.75% during Thursday's policy meeting and potentially in the coming months, MFS Investment's Peter Goves says in a note. The current level of interest rates is already restrictive, while the U.K. labor market remains weak and should mitigate second-round effects of high energy prices on inflation, if any emerge, Goves says. "Caution can and should prevail but a hold next week--and beyond--is looking increasingly plausible." Markets are fully pricing in a quarter-point BOE rate increase in November, and a 46% chance of a second rate rise by year-end, LSEG data show. (miriam.mukuru@wsj.com)

0902 GMT - A solid rise in the Ifo German business climate index points to continuing growth momentum in Germany, Philipp Scheuermeyer at KfW Research says in a note. Government reforms have driven sentiment higher, he says. "We expect a continuing growth momentum thanks to strong construction output and, presumably, even some growth in consumer spending." Still, with the peace deal between the U.S. and Iran on shaky ground, signals for the second quarter look less certain, Scheuermeyer says. Growth can continue with moderately higher energy prices. However, if energy exports from the Gulf region remain stalled for too long, the energy-price shock will ultimately take its toll, he says. Ifo's business-climate index unexpectedly rose to 86.6 in July from 85.7 in June. (don.forbes@wsj.com)

0854 GMT - Sterling's pullback against the euro has further to run as the Bank of England should refrain from raising interest rates this year, ING's Francesco Pesole says in a note. The BOE is likely to leave rates steady on Thursday but the focus is on whether support for tighter policy broadens within the Monetary Policy Committee, he says. "If inflation is still expected to remain contained, we believe the BOE will leave rates unchanged for the rest of the year." This is the clearest near-term risk for sterling given market pricing for rate rises this year, he says. LSEG data show markets price in 37 basis points of rate increases by year-end. The euro rises 0.2% to 0.8546 pounds. (renae.dyer@wsj.com)

0847 GMT - While acting Bank Indonesia Gov. Destry Damayanti is expected to provide near-term policy continuity, markets will closely watch the appointment of a permanent successor for signs of any shift in priorities, ING's Deepali Bhargava says in a note. Investors are likely to focus on whether the central bank continues prioritizing rupiah and macroeconomic stability or places greater emphasis on supporting economic growth following Perry Warjiyo's surprise resignation, she says. She expects policy continuity for now, noting that Destry has played a key role in many of Bank Indonesia's recent policy initiatives. However, she says the appointment of a permanent governor will be critical in determining whether the central bank maintains its current policy approach or gradually shifts priorities, with markets likely to remain cautious until greater clarity emerges. (yingxian.wong@wsj.com)

0843 GMT - Malaysia is likely to be a key beneficiary of the ongoing restructuring of global supply chains, supported by stronger AI-related participation, with expanded re-export activities and increased Chinese investment inflows, UOB economists say in a note. They say the country has benefited from both long-term production shifts under the China+1 strategy and near-term trade diversion away from China. Looking ahead, sustaining these gains will depend on Malaysia's ability to deepen local manufacturing capabilities, move further up the technology value chain and create more domestic value as tougher rules of origin and anti-transshipment measures take effect, they add. (yingxian.wong@wsj.com)

0833 GMT - Yields on U.K. government bonds, or gilts, fall as oil prices slide due to a pause in Middle East hostilities, but they are also helped lower after Prime Minister Andy Burnham indicated possible cut to welfare spending. In an interview with the BBC, Burnham said he wants to make it harder for people to claim benefits, which could calm concerns that his government could intend to increase public spending. Ten-year gilt yields are down 5.4 basis points to last trade at 4.984%, having hit a one week-low of 4.971% earlier in the session, Tradeweb data show. (miriam.mukuru@wsj.com)

0815 GMT - Bank Indonesia Gov. Perry Warjiyo's resignation could make further interest-rate increases this year somewhat less likely, particularly if a more growth-oriented governor is appointed, Gareth Leather of Capital Economics writes. The immediate policy implications should be limited, as Senior Deputy Gov. Destry Damayanti has been appointed as acting governor until a permanent successor is chosen, he notes. Warjiyo's departure will likely fuel speculation he faced pressure to better support President Prabowo Subianto's pro-growth agenda, the senior Asia economist says. It may also renew concerns about the central bank's independence, after its mandate was broadened to support economic growth and Prabowo appointed his nephew to BI's board. Capital Economics backs expectations for BI to keep its policy rate unchanged for the rest of 2026. (yingxian.wong@wsj.com)

(END) Dow Jones Newswires

July 27, 2026 05:40 ET (09:40 GMT)

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