Global Forex and Fixed Income Roundup: Market Talk

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

0641 GMT - The Nikkei Stock Average fell 2.65% to 62907.84, its lowest closing level since July 30, amid strong risk-off sentiment. "Investors questioned whether the latest round of AI earnings was strong enough to justify elevated valuations and continued heavy spending on computing infrastructure," InTouch Capital Markets analysts say in commentary. Also, "the growth sensitive backdrop was compounded by renewed geopolitical concerns," the analysts add. Among the worst performers on Japan's benchmark index, Resonac Holdings slid 11.2%, Ibiden dropped 9.5%, and Screen Holdings fell 8.8%. The dollar was at 157.10 yen versus Y158.14 around Wednesday's Tokyo market close. (ronnie.harui@wsj.com)

0635 GMT - Signs of rising inflation expectations and a high risk that the Reserve Bank of Australia's inflation target is losing credibility justifies the central bank's recent hawkishness, says Shane Oliver, chief economist at AMP. But for government bond traders, the hawkishness increases the risk of a recession and the likelihood that inflation will fall. It points to potentially lower long-term bond yields as the yield curve inverts, he adds. Australian 10-year government bond yields will likely go higher from current levels, but an excessive tightening by the RBA that brings on a recession could derail that. It's not AMP's base case, but it's a significant risk, he adds. (james.glynn@wsj.com; @JamesGlynnWSJ)

0634 GMT - Should concerns over France intensify, German government bonds could once again be sought as a "safe haven," Eyb & Wallwitz portfolio manager John Petersen says in a note. French government bonds continue to underperform their German counterparts due to concerns about the budget and social unrest. Ten-year French OAT yields rise 3.5 basis points to 5.051% while German 10-year Bund yields fall 0.1 basis point to 3.424%, Tradeweb data show. This takes the spread between the two to a multiyear high above 162 basis points. (emese.bartha@wsj.com)

0617 GMT - The U.S. Treasury is expected to keep auction sizes unchanged at the upcoming quarterly refunding announcement, but make its guidance less restrictive, Barclays rates strategists say in a note. "A shorter commitment and greater flexibility over issuance composition would better position it to respond to rising borrowing needs or a changing case for long-end issuance," it says. Replacing "at least the next several quarters" with "the coming quarters" and referring to "overall" auction sizes would create flexibility over both the timing and composition of issuance, Barclays says. (emese.bartha@wsj.com)

0609 GMT - It feels as though investors in the Australian government bond market are now prepared to look far enough ahead to focus on the strengthening of headwinds to economic growth, says Josh Rout, portfolio manager at Franklin Templeton. Those headwinds largely stem from the correction in the housing market having a negative wealth effect and causing the savings rate to rise, while curbing government revenue growth, he adds. The Reserve Bank of Australia will be very cautious about hiking rates further from here. The bigger question now is when will the market start to entertain the next move being an interest rate cut, Rout says. (james.glynn@wsj.com; @JamesGlynnWSJ)

0546 GMT - ANZ Bank has lowered its expectations for Australian house prices. The major mortgage lender now expects capital city housing prices to fall 6.2% this year and 4.5% next year, then rise 3.6% in 2028. In August, it predicted a 4.3% fall this year, a 3.4% decline in 2027 and a 4.3% rise in 2028. The housing market has softened more than expected, particularly in Brisbane and Perth, it says. Capital city housing prices have already eased 6.4% from their peak and are on track to record a total peak-to-trough decline of 13.5% this cycle, ANZ adds.(james.glynn@wsj.com; @JamesGlynnWSJ)

0525 GMT - The Bank of Korea left the door open to further rate hikes despite opting to stand pat earlier. Even without any dissent to the hold, Citi continues to expect 25bp hikes each in November 2026 and February 2027, bringing the terminal rate to 3.5%. Gov. Shin stressed that the hold was the result of preemptive tightening that's helped stabilize FX and bond markets, buying the BOK time to maneuver. He reiterated that decisions remain data-dependent, and while the BOK monitors market-implied pricing for terminal rates, it is under no obligation to follow that. Citi reckons the BOK will next month raise its 2026-2027 GDP growth forecasts to around 3.8% and 3.3% respectively, from 3.3% and 2.9%. It also expects an upgrade to 2027 inflation views. (fabiana.negrinochoa@wsj.com)

(END) Dow Jones Newswires

October 22, 2026 02:41 ET (06:41 GMT)