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.

0803 GMT - Credit holds appeal as an asset class, although the current uncertain geopolitical and economic backdrop mean investors need to be selective, Eyb & Wallwitz portfolio manager John Petersen says in a note. Higher yields have improved the outlook for future returns, making it increasingly worthwhile considering taking on more credit risk, he says. "In the current environment, however, prudent positioning and careful selection remain essential," he says. (emese.bartha@wsj.com)

0803 GMT - The Philippines central bank's bigger-than-expected 50bp rate hike could be the final one of its tightening cycle, if energy prices stabilize and drop back from early next year, Capital Economics' Jason Tuvey says. BSP has now delivered 125 bps of tightening as high inflation and a weak peso remain key concerns. It says it is ready to take further action, but CE thinks focus will shift to supporting growth. Excluding the pandemic, GDP growth in 2Q was the slowest since late 2009, and CE expects the recovery to be bumpy over the coming quarters. Iif energy costs remain elevated into next year and El Niño stokes food inflation, BSP is likely to keep rates high for longer than CE anticipates or even hike again. (fabiana.negrinochoa@wsj.com)

0756 GMT - The widening of eurozone sovereign-bond spreads since the middle of September is a notable departure from the relatively orderly price action of recent years, but it doesn't signal a resurgence of sovereign risk, Goldman Sachs' Simon Freycenet and Loic Mathys say in a note. "Weakness is concentrated in countries where a strong idiosyncratic component is at play," they say. France, and countries with a strong beta to energy such as Italy are key examples. That said, the recent widening of French OAT-German Bund yield spreads due to concerns about France's budget and social unrest has outstripped what can be explained by fundamentals, they say. (emese.bartha@wsj.com)

0753 GMT - The results of Japan's 2027 wage talks could help shape the Bank of Japan's interest-rate increases. If the pace of wage growth in the 2027 shunto negotiations remains around the same level as 2024-2026, or even slightly below, it would help support the view that underlying inflation is anchoring at 2%, likely prompting the central bank to continue raising interest rates toward neutral levels, Mizuho Securities economists say. If the growth clearly outpaces previous years', the BOJ might have to push rates above neutral levels, they add. In a shunto negotiation draft released Thursday, Japan's top labor union group urged its members to seek a 6% pay raise with 5% as the floor. (megumi.fujikawa@wsj.com)

0747 GMT - Yields on U.K. government bonds, or gilts, trade steady, helped by lower yields on U.S. Treasurys and German Bunds due to falls in equities and concerns about the sustainability of debt-funded AI investments. Gilts perform much better than their French counterparts, where yields rise sharply due to concerns about France's budget and social unrest. "France's fiscal woes make the U.K. look better by comparison," Capital Economics' Joe Maher says in a note. Still, gilts underperform U.S. and German peers amid jitters ahead of next week's U.K. budget and a likely rate increase by the Bank of England in early November. Ten-year gilt yields trade steady at 5.386%, Tradeweb data show. (jessica.fleetham@wsj.com)

0748 GMT - The euro rises 0.1% to $1.1243 against a weaker dollar, despite higher energy prices and growing concerns about French debt and civil unrest. "One can only conclude that the biggest market driver at the moment is the heavy and concentrated positioning in U.S. tech and the dollar, which is being gently pared back," ING's Chris Turner says in a note. Currency traders are likely to keep a close watch on the short-end of the Treasury yield curve, he says. Any tech worries that prompt markets to trim Federal Reserve interest-rate rise expectations, dragging short-end yields lower, could lead to a broader dollar correction, he says. In this case, the euro could break above $1.1270-$1.1275, which could open up a move to $1.1340-$1.1350, he says. (renae.dyer@wsj.com)

0729 GMT - Japan's 2027 shunto spring wage negotiations could serve as an important touchstone for whether the nation's pay growth will become a sustainable trend. "The shunto talks have reached a critical point: transitioning from achieving high wage hikes as a one-off win to establishing high annual wage gains as a shared foundation for both labor and management," says Daiwa Securities economist Kenji Yamamoto. For the Bank of Japan, the key lies in whether wage-growth momentum accelerates further, and if it continues and spreads across the economy, he says. Japan's top labor union group on Thursday said it is urging member unions to demand a pay raise of at least 5%, with a 6% increase the main focus. The 2026 shunto talks resulted in a third year of wage hikes averaging more than 5%. (megumi.fujikawa@wsj.com)

0721 GMT - The Swiss franc rises to a three-month high against the euro and a four-week high versus the dollar as French debt concerns and AI jitters drive investors towards safe-haven assets. Mounting worries about France's fiscal position and civil unrest weigh on the euro and cause the spread between 10-year French and German government bond yields to reach its widest since November 2011 at 164.28 basis points, LSEG data show. Meanwhile, U.S. stock futures are lower, led by the tech-heavy Nasdaq, on worries about whether debt-funded investments in AI will yield results. The euro falls to as low as 0.9209 francs and the dollar hits as low as 0.8190 francs.(renae.dyer@wsj.com)

0715 GMT - Bitcoin edges lower as U.S. stock futures fall on rising oil prices and AI concerns. The increase in oil prices follows an escalation in Iran-backed Houthi attacks on Saudi Arabia and as data showed U.S. crude inventories fell more than expected in the week ended October 16. Meanwhile, Tesla shares fell in after-hours trade after it cut its 2026 capital expenditure target, raising fresh concerns about AI investments. Bitcoin falls 2.6% to $82,442, LSEG data show. Falls are limited, however, as the dollar and Treasury yields decline. (renae.dyer@wsj.com)

0646 GMT - The dollar falls to a three-week low against a basket of currencies as Treasury yields decline and on concerns about the sustainability of debt-funded investments in artificial intelligence infrastructure. U.S. stocks futures fall, led by the tech-heavy Nasdaq, as the latest earnings after Wednesday's close failed to allay AI worries, Deutsche Bank analysts say in a note. Tesla shares fell in after-hours trade after it cut its 2026 capital expenditure target. "So that raised questions about the speed of its transition into AI and robotics, while current revenue and earnings were close to expectations," the analysts say. The DXY dollar falls to as low as 101.476. (renae.dyer@wsj.com)

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)

(END) Dow Jones Newswires

October 22, 2026 04:03 ET (08:03 GMT)