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

0850 GMT - Rising competition for funds by AI companies and governments is causing investors to demand higher yields on their investments, Nuveen's Laura Cooper says in a note. Many of the long-dated bond yields of major economies are close to multiyear highs as investors absorb increased bond issuance both from corporates and sovereigns, she says. Concerns about fiscal sustainability are also contributing to rising government bond yields, Cooper says. "As existing debt rolls over, higher borrowing costs feed into interest expense, putting more pressure on deficits and requiring more issuance." Ten-year German Bund yields climb 0.1 basis point to 3.253%, staying close to a 15-year high of 3.275% reached last week, Tradeweb data show. (miriam.mukuru@wsj.com)

0847 GMT - Sterling rises to a one-week high against the euro, recovering to levels seen before the U.S. Treasury announced increased buybacks of long-term securities. This signals that the positive premium in the euro has been scaled back, ING's Francesco Pesole says in a note. "If calm is indeed restored in the bond market, expect the pair to return to tracking short-term rate differentials closely." Sterling is likely to turn lower against the euro in coming months as expectations for interest-rate rises by the Bank of England look excessive, he says. The euro falls to as low as 0.8544 pounds and ING expects it to reach 0.8700 over the next few months. (renae.dyer@wsj.com)

0817 GMT - March 2033 gilt auction due at 0900 GMT could attract good demand given current relatively high yields, Mizuho's Evelyne Gomez-Liechti says in a note. "A solid auction could extend the rally towards the long end, but we remain cautious given the Autumn Budget risk." March 2033 gilt yields climb 2 basis points to last trade at 4.799%, Tradeweb data show. (miriam.mukuru@wsj.com)

0815 GMT - The euro is likely to stabilize against the dollar rather than extend its recent gains as it looks overvalued, ING's Francesco Pesole says in a note. ING's models suggest the short-term fair value for the euro sits just below $1.16. This indicates there is probably some, albeit contained, risk premium on the dollar linked to last week's U.S. Treasury announcement about increasing buybacks of long-term securities, Pesole says. That argues against the euro taking another leap higher above $1.17, he says. The euro trades steady at $1.1657, having reached a three-month high of $1.1711 on Friday, LSEG data show. (renae.dyer@wsj.com)

0721 GMT - Yields on U.K. government bonds, or gilts, are little changed as bond markets calm after a report on CNBC indicated that the U.S. could use cash in the Treasury General Account to buy back Treasury bonds. "Using the TGA may help fund the larger buyback operations without resorting to higher issuance of short-term debt," Deutsche Bank Research strategists say in a note. Ten-year gilt yields are steady at 5.054%, Tradeweb data show. (miriam.mukuru@wsj.com)

0720 GMT - Bitcoin continues to perform well, remaining comfortably above $80,000, after rising to a three-month high overnight. The cryptocurrency has continued to rally in the wake of last week's U.S. Treasury announcement about increasing buybacks of long-term bonds and President Trump pushing for the passage of the Clarity Act crypto legislation. Short covering, where investors close out earlier bets against an asset as it rises, has helped bitcoin's rally, Charles Schwab's Joe Mazzola says in a note. Bitcoin rises 2.3% to $80,732, having hit as high as $81,237 overnight, LSEG data show. Ether gains 1.4% to $2,509, near the six-month high of $2,545 reached on Saturday. (renae.dyer@wsj.com)

0709 GMT - Eurozone government bond yields decline in opening trade as U.S. Treasury yields stabilize after rising during Asian trade. Oil prices decline even as the Middle East situation is turning more complex after U.S. Treasury Secretary Scott Bessent launched a campaign to isolate Iran and warned countries and companies against making business with the country. Tuesday's eurozone government bond supply comes from Germany which sells 5 billion euros in the September 2028 Schatz. The 10-year Bund yield falls 1.1 basis points to 3.241% and declines are similar in other 10-year bonds, though 10-year Italian government bonds slightly outperform, according to Tradeweb. (emese.bartha@wsj.com)

0655 GMT - The dollar rises to a one-week high against a basket of currencies after Treasury Secretary Scott Bessent announced new sanctions aimed at Iran. Bessent warned that countries and companies that do business with Iran will face retaliation from the U.S. However, he didn't outline any specific steps the U.S. would take against individual countries, including China. The threat of exclusion from the dollar-based financial system stoked speculation that some countries and banks might buy dollars pre-emptively, lifting the dollar, IG analysts say in a note. The DXY dollar index rises to as high as 99.106. (renae.dyer@wsj.com)

0635 GMT - The neutral rate--the level that is neither stimulative nor restrictive to the economy--is one of the key risks to the Japanese government bond market, says Sony Financial Group economist Takayuki Miyajima. If financial conditions stay accommodative even as rate hikes take effect, views on the neutral rate could rise above the 1.50%-1.75% projected by bond market experts, he says. That shift could push the market's terminal rate expectation above the current 2.25% level and lock the 10-year JGB yield firmly above 3%, he adds. The 10-year JGB yield is last up 1 basis point at 2.890%. (megumi.fujikawa@wsj.com)

0613 GMT - One of the biggest risks surrounding the Japanese government bond market remains Prime Minister Sanae Takaichi's expansive fiscal policy, says Sony Financial Group economist Takayuki Miyajima. "As the U.S. government has signaled caution over the weak yen and rising Japanese bond yields, the Takaichi administration is unlikely to push ahead with fiscal expansion while ignoring the markets and Washington," he says. "If that expectation proves wrong, the fiscal risk premium could rise once again, potentially driving [the 10-year JGB] yield well past 3%," he adds. The 10-year JGB yield is last up 1.0 bp at 2.890%. (megumi.fujikawa@wsj.com)

0610 GMT - Goldman Sachs analysts revise their forecast for the Bank of Japan's policy rate, now expecting the Japanese central bank to hike rates in September, rather than in January 2027, as previously expected. "Thereafter, we expect a rate hike in January 2027, assuming confirmation of strong momentum in the 2027 Shunto wage negotiations, and July 2027, leaving the policy rate at 1.75%," they say. The BOJ is becoming increasingly vigilant against the risk of underlying inflation exceeding 2%, which raises the possibility of earlier rate hikes, the GS analysts say. They add, however, that the BOJ is maintaining its stance that monetary policy hasn't fallen behind the curve at this point, citing underlying inflation below 2% as the reason. (emese.bartha@wsj.com)

0603 GMT - The geopolitical escalation adds a new layer of complexity heading into Jackson Hole, Danske Bank's Jesper Fjarstedt says in a note, referring to the Kansas City Fed's annual symposium Thursday through Saturday. Federal Reserve Chairman Kevin Warsh will deliver a speech on Friday, "with consensus expecting him to avoid a definitive policy signal and unlikely to address Treasury's market intervention directly," the senior analyst says. Meanwhile, Treasury Secretary Scott Bessent said Monday that the U.S. is launching a campaign to isolate the Iranian regime and also warned that countries and companies doing business with Iran will face U.S. retaliation.