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

0843 ET - The Bank of England has suggested that the bar to a near-term interest-rate increase is high, Morgan Stanley's Bruna Skarica and Fabio Bassanin say in a note. During Thursday's rate decision, the BOE said that so far there is little evidence of second-order effects of inflation. Nonetheless, the BOE could be pushed to raise rates if energy costs stay elevated for a prolonged period, Skarica and Bassanin say. Markets price in a 28% probability of a BOE rate increase in September, and fully price in the possibility of one quarter-point rate hike by the end of 2026, LSEG data show. (miriam.mukuru@wsj.com)

0842 ET - Canada's economy roared back to life in 2Q. Statistics Canada estimates industry-level GDP increased 0.2% on-month in June following stronger-than-expected growth of 0.3% a month earlier. Based on that, the economy expanded 3.4% annualized in 2Q, the strongest growth since 1Q of 2023 and following two quarters of weakness. Though not based on full data, it points to growth greatly outpacing the 2.5% projected by the Bank of Canada and offers a solid handoff for 3Q even with heightened uncertainty from the latest U.S. tariff threats. (robb.stewart@wsj.com; @RobbMStewart)

0841 ET - Bitcoin edges lower amid uncertainty over key U.S. crypto legislation and the Middle East conflict. The Clarity Act, which aims to establish a framework for regulating digital assets, has stalled in the Senate and it's unclear whether the bill will receive a vote before summer recess starts on August 8. Meanwhile, U.S. officials said Hamas and other Palestinian militant groups agreed to disarm but Israel is yet to comment. Investors are also digesting a batch of U.S. tech earnings this week. Apple shares fell after forecasting weaker sales growth while Amazon gained after posting stronger-than-expected revenue. Elsewhere, crypto-hoarding firm Strategy swung to a quarterly loss, citing bitcoin's decline. Bitcoin falls 1.4% to $63,811, according to LSEG. (renae.dyer@wsj.com)

0840 ET - Eurozone inflation remains above target with significant risks ahead, says Iain Simmons at Oxford Economics. Headline inflation rose 0.1 percentage points to 2.9% in July amid high energy prices due to escalation in the Middle East. Since the ceasefire in Iran collapsed, the risk of broader inflation effects has risen substantially, strengthening the case for a rate hike in September, he says. "Inflation remains above target and yesterday's upside GDP surprise suggests that the eurozone economy may be more able to absorb tighter policy more easily than previously thought." Still, the inflation data show a relatively muted reaction to the Middle East escalation, and second-round wage effects are likely to be limited later this year, Simmons says. (don.forbes@wsj.com)

0838 ET - Investors have shown strong demand for new euro hybrid bonds, supporting new issuance of these securities, LBBW's Matthias Schell says in a note. Hybrid bonds are debt securities that combine the characteristics of bonds and equities. Given the strong demand for the assets, new euro hybrid bonds supply is projected to reach a new record in 2026, Schell says. (miriam.mukuru@wsj.com)

0838 ET - Concerns over Japan's fiscal outlook, uneven economic performance and wide interest-rate differential with the U.S. are keeping the yen weak despite efforts to support the currency, Validus Risk Management's Harun Thilak says in a note. These forces continue to test the effectiveness of direct currency interventions and the Bank of Japan's gradual approach to monetary policy tightening, he says. "While Japanese authorities retain tools to manage excessive volatility, a sustained recovery in the yen is likely to depend on a narrowing of the interest-rate differential between Japan and the U.S., stronger domestic growth and greater confidence in Japan's fiscal outlook." The dollar rises 0.6% to 160.38 yen after falling to an 11-week low of 157.96 Thursday following suspected interventions. (renae.dyer@wsj.com)

0835 ET - The current heatwave in Europe is increasing risks of inflation, Felix Schmidt at Berenberg says in a note. "Very low water levels in German rivers are causing supply-chain problems, and the ongoing drought could lead to lower harvests and thus cause food prices to rise," he says. Eurozone inflation increased in July, driven by higher energy prices, and is unlikely to alter the European Central Bank's policy outlook. "The ECB will focus on whether energy prices ease in coming weeks before its September meeting, with August inflation data likely to be more important," Schmidt says. (don.forbes@wsj.com)

0737 ET - Supply of new euro-denominated hybrid bonds hit a record half-year volume in the first six months of 2026, LBBW's Matthias Schell says in a note. Companies issued a total of 37 billion euros ($42.7 billion) in new euro hybrid bonds in the first half of the year, double the volume in the same period last year, he says. Hybrid bonds are debt securities that offer features of both debt and equity. "Hybrid bonds with an investment-grade rating continue to offer an attractive risk-reward ratio, as they are issued by issuers with strong creditworthiness," Schell says. (miriam.mukuru@wsj.com)

0700 ET - Euro-denominated credit looks favorable, supported by healthy corporate balance sheets, an improving economic outlook in the eurozone and attractive yields, LBBW's Michael Kohler says in a note. Euro-credit spreads have been resilient amid the market turmoil caused by high oil prices, Kohler says. Given the high geopolitical uncertainty, the less volatile euro investment-grade credit looks attractive, he says. (miriam.mukuru@wsj.com)

0634 ET - In eschewing forward guidance, Federal Reserve Chairman Kevin Warsh could find that this creates a greater risk of markets losing confidence in the Fed, BlueBay CIO Mark Dowding says in a note. "The prior forward guidance era under previous Fed Chairs has seen the institution afforded high levels of trust and credibility." However, in more of an information vacuum, doubts could increase and trust in the Fed might start to erode, Dowding says. At a time when U.S. debt levels are at record levels and continue to grow at an alarming rate, a laissez-faire attitude with respect to market outcomes could embed a high degree of risk should market confidence be suddenly lost, he says. (emese.bartha@wsj.com)

0628 ET - U.S. Treasury yields rise, particularly short-dated yields, as investors continue to digest Wednesday's Federal Reserve decision to hold rates steady and Chairman Kevin Warsh's communication. "Yields remain at elevated levels and could continue to react to the volatility in energy markets and monetary policy expectations as the lack of Fed guidance increases uncertainty," DHF Capital S.A's Bas Kooijman says in a note. The dollar rises meanwhile, stabilizing after falls following the Fed's interest-rate decision and suspected Japanese currency intervention which boosted the yen. The DXY index rises 0.3% to 100.197. The two-year Treasury yield rises 2.7 basis points to 4.256% while the 10-year yield is up 0.8 basis points at 4.669%, according to Tradeweb. (emese.bartha@wsj.com)

0618 ET - The timing of Thursday's suspected Japanese yen interventions to shore up the currency were similar to previous interventions, MUFG Bank analysts say in a note. The likely interventions were carried out at month-end, falling into the period in which confirmation won't be published until the end of August, they say. Moreover, it took place during New York trading, given the "clear impression that this had the full support of the U.S. administration." Treasury Secretary Scott Bessent told Fox News Thursday that the yen seemed "very undervalued" while media reports said the New York Federal Reserve performed a dollar-yen rate check. The dollar rises 0.3% to 159.98 yen after reaching an 11-week low of 157.96 Thursday, according to LSEG.