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

1143 GMT - U.K. government bonds, or gilt, could stay under pressure due to the Middle East conflict as well as concerns about the nation's public finances, Federated Hermes' Filippo Alloatti says in a note. Focus is on the new government's spending commitments and revenue generating plans expected to be revealed in the coming weeks or months. "Markets remain sensitive to signs that spending commitments may not keep up with available resources," Alloatti says. Ten-year gilt yields rise 1.8 basis points to last trade at 4.968%, Tradeweb data show. (miriam.mukuru@wsj.com)

1133 GMT - Federated Hermes continues to view the Federal Reserve as largely on hold, while inflation remains one of the most challenging macroeconomic variables to forecast, portfolio manager Karen Manna says in a note. The transition from the low-inflation environment after the 2008-09 financial crisis to the post-pandemic inflation surge was driven by supply-chain disruptions, shifting consumption patterns, and labor-market imbalances, she says. While many of those distortions have faded, a new set of variables continue to cloud the inflation outlook. These include tariffs implemented last year, periods of reduced economic visibility surrounding last fall's government shutdown, elevated energy prices, and substantial AI-related capital spending. "The result is likely to be a more uneven and episodic disinflation process than markets experienced during prior cycles, reinforcing the Fed's cautious and data-dependent approach." (emese.bartha@wsj.com)

1115 GMT - U.K. growth data captures the story of the economy over the past two years, Julius Baer's Thomas Watts says in a note. "Growth, but hard-won and unevenly spread." U.K. GDP rose 0.1% in May, though that is flattering, he says. Services was doing all the heavy lifting--up 0.3%--while industrial production and construction contracted. That serves as a reminder that business confidence remains fragile even as the economy edges forward, Watts says. The growth trend is, however, kinder than the monthly snapshot, rising 0.7% in the three months to May. The new U.K. replacement for Rachel Reeves as treasury chief--expected to be Shabana Mahmood--would be wise not to waste that advantage, he adds. (edward.frankl@wsj.com)

1111 GMT - Keir Starmer hands over the British economy to his successor Andy Burnham on much better footing, Deutsche Bank's Sanjay Raja says in a note. U.K. gross domestic product expanded by 0.1% on the month, and on a three-month basis it is up 0.7%. It is likely that the U.K. will continue to sit at, or near the top, of the G-7 league table when it comes to economic growth in the second quarter, he says. Looking ahead, momentum will likely dampen a bit, given the lingering Iran war energy shock and geopolitical uncertainty. But despite England's World Cup loss on Wednesday, the U.K. is set to see a temporary bump in GDP over July given extended pub-trading hours, Raja says. (edward.frankl@wsj.com)

1108 GMT - Yields on U.K. 10-year government bonds, or gilts, could fall by around 20 basis points if the new U.K. government sticks to current fiscal measures, UBS Global Research strategists say in a note. Andy Burnham is expected to become the new U.K. prime minister on Monday, after Keir Starmer resigned in June. Markets currently price in around 20bps of risk premium on 10-year U.K. government bonds from policy uncertainty, the strategists say. "If the Autumn Budget is compliant with the current fiscal rules, that gives gilts the room to rally," they say. Ten-year gilt yields climb 0.8 basis point to last trade at 4.958%, Tradeweb data show. (miriam.mukuru@wsj.com)

1109 GMT - The British economy returned to growth in May, but renewed energy-price pressures cloud the outlook, Yael Selfin, chief economist at KPMG U.K., says in a note. U.K. GDP rose 0.1% in May, driven by recovery in the services sector. May's warmer weather provided a welcome boost to businesses, with stronger consumer spending helping to drive growth in consumer-facing services, Selfin says. That momentum likely carried forward, supported by World Cup-related spending. However, that might not be enough to offset weakness across other parts of the economy. "The recent rise in energy prices, driven by a pick-up in tensions in the Middle East, could pose a risk to the growth outlook, with financial conditions also tightening as a result," she notes. (edward.frankl@wsj.com)

1058 GMT - Pimco continues to expect inflation to moderate over the second half of the year and the Federal Reserve to remain on hold, Tiffany Wilding says in a note. "However, recent communications suggest policymakers are increasingly preparing markets for the possibility of renewed tightening should inflation fail to ease as expected," the Pimco economist says. Additional tightening reinforces the Fed's inflation-fighting credibility and helps anchor long-run inflation expectations, she says. A credible policy response may ultimately reduce the inflation risk premium embedded in longer-dated bonds, limiting upward pressure on long-end yields even as the Fed tightens policy, she says. (emese.bartha@wsj.com)

1032 GMT - The U.S.-Iran conflict prevents sustained dollar losses after recent lower-than-expected U.S. inflation data, Commerzbank's Thu Lan Nguyen says in a note. Inflationary risks remain as the conflict lifts oil prices, she says. Expectations for the Federal Reserve to raise interest rates should therefore persist for some time, she says. The re-escalation in the Iran war has had a limited impact so far but the longer energy prices stay elevated, the more likely second-round inflation effects become. "As long as the market sees this risk and therefore continues to price in U.S. rate hikes, dollar weakness is likely to remain contained." The DXY dollar index rises 0.1% to 100.537 after reaching a four-week low of 100.353 Wednesday. (renae.dyer@wsj.com)

1030 GMT - Shrinking oil inventories have left global markets vulnerable, says Canada's export credit agency. Export Development Canada forecasts oil prices will average around $96 a barrel this year and nearly $84 a barrel in 2027, reflecting ongoing uncertainty and efforts to rebuild depleted stocks as a buffer against future flareups. Stuart Bergman, EDC's chief economist, says storage tanks scattered around the world have become the oil market's "marginal producer."Inventories accumulated before the crisis and emergency stockpile releases have helped offset reduced activity, but at the cost of inventories falling below seasonal norms, Bergman notes. He says a permanent agreement to end the war and restoring ship traffic in the Strait of Hormuz to pre-crisis levels would ease constraints, but oil markets remain tight and vulnerable to further disruptions and price volatility if geopolitical risks escalate. (robb.stewart@wsj.com; @RobbMStewart)

1030 GMT - Canada's nearterm growth outlook remains subdued, slowing amid persistent trade uncertainty and weaker population growth, the country's export credit agency says. Export Development Canada's summer outlook projects the economy will expand by 1% in 2026 before strengthening to 2.1% in 2027. Real GDP per capita has been showing improvement largely thanks to the population adjustment, but weak expectations for wage growth suggest household demand will remain fragile over the year ahead, EDC reckons. It adds business investment in machinery and equipment continues to slip due to global uncertainty, which is weighing on productivity and near-term growth. exports are holding up but growth is narrow, supported by energy and gold and masking weakness elsewhere. (robb.stewart@wsj.com; @RobbMStewart)

1024 GMT - Investors are betting on the Bank of England increasing interest rates in November as the U.K. economy shows resilience. The U.K. monthly GDP rose by 0.1% in May, up from a 0.1% contraction in April."The U.K. economy weathered the rise in energy prices and mortgage rates caused by the Iran war better than we had feared," Berenberg's Andrew Wishart says in a note. The Middle East conflict and inflation concerns are also driving expectations of the BOE raising interest rates. Markets price in a total of 38 basis points of BOE interest rate rises in 2026, with the first quarter-point increase fully priced in for November, LSEG data show. (miriam.mukuru@wsj.com)

0921 GMT - U.S. Treasury yields and the dollar edge higher, reversing some of their previous falls. Yields and the dollar fell Wednesday after June U.S. producer price data echoed Tuesday's below-forecast CPI figures. "Together the two reports pulled yields and the dollar lower as inflation concerns abated to some extent," DHF Capital S.A's Bas Kooijman says in a note. Markets will monitor incoming data for confirmation of a sustained trend of slowing inflation. However, ongoing Middle East tensions threaten to push oil prices higher again, he says. The two-year Tresury yield rises 2.8 basis points to 4.155%, while the 10-year yield rises 2.4 basis points to 4.568%, according to Tradeweb. The DXY dollar index rises 0.1% to 100.537. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

July 16, 2026 07:43 ET (11:43 GMT)

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