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.

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. (renae.dyer@wsj.com)

0607 ET - The euro shows little reaction, remaining weaker against the dollar, even after data showed an unexpected acceleration in eurozone inflation in July. Headline annual inflation rose to 2.9% in July from 2.8% in June while core inflation rose to 2.5% from 2.4%. Economists in a WSJ survey expected headline and core inflation to remain at June's levels. The data support the case for the European Central Bank to raise interest rates further this year. However, this was already largely priced in ahead of the data, limiting the euro's reaction. The euro falls 0.2% to $1.1506, little changed from levels before the data. (renae.dyer@wsj.com)

0548 ET - The cost of euro credit default protection falls as concerns about the Middle East conflict ease and sentiment improves. The U.S. said it had reached a deal with militant groups in the Middle East for the complete disarmament of Hamas and other armed groups in Gaza. The announcement reduces concerns about a broader conflict in the Middle East. Oil prices also fall amid reports of a modest improvement in tanker traffic through the Strait of Hormuz while equities rise as tech stocks recover. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 5 basis points to 258bps, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0532 ET - Taiwan's growth is likely to moderate in 2H despite export orders continuing to show strong momentum, ING says. It adds while there are no signs of a significant slowdown, a hot inflation print could prompt the central bank to deliver a 12.5bp hike in either September or December, but won't significantly drag growth, ING's Lynn Song says. The recent tech sell-off in equity markets are causing jitters and it is unclear how long the tech capital expenditure cycle will continue. There are also increasingly challenging base effects that could start cutting into 4Q growth, Song says. Looking ahead, Taiwan's economic outlook remains firmly tied to the artificial-intelligence boom, given its central role in the semiconductor supply chain. This prompts ING to raise its 2026 GDP growth forecast for Taiwan to 11.1% from 10.1% previously.(amanda.lee@wsj.com)

0527 ET - The Japanese yen's losses against the dollar could remain contained for now due to the prospect of further currency interventions, MUFG Bank analysts say in a note. Following suspected interventions Thursday, Japan's Ministry of Finance often acts on a second occasion so markets will likely show some reluctance to buy the dollar versus the yen, they say. However, there is a risk that dollar-yen buyers will soon return. There was a "lack of conviction" from the Bank of Japan about the potential need to step up the pace of monetary tightening at Friday's meeting when it left rates steady, the analysts say. The dollar rises 0.3% to 160.03 yen after reaching an 11-week low of 157.96 Thursday, LSEG data show. (renae.dyer@wsj.com)

0511 ET - The Bank of Japan could potentially pull forward its next interest-rate hike into September or October, rather than the six-month interval many had expected, says Masahiko Loo of State Street Investment Management. The strategist expects the BOJ to gradually move toward a 1.5%-1.75% terminal rate. At Friday's news conference, BOJ Gov. Kazuo Ueda voiced heightened concerns about potential inflation overshooting. He said such a risk is too big to ignore. "If we judge that financial conditions are too accommodative, it is entirely possible that we could accelerate the pace of interest rate hikes," Ueda said.(megumi.fujikawa@wsj.com)

(END) Dow Jones Newswires

July 31, 2026 08:38 ET (12:38 GMT)