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.

0555 GMT - Prime Minister Sanae Takaichi's fundamentally cautious stance toward monetary tightening is likely to remain unchanged despite the Bank of Japan's faster-than-usual pace of interest-rate increases, say analysts at Mitsubishi UFJ Morgan Stanley Securities. BOJ board members Toichiro Asada and Ayano Sato, both appointed by Takaichi, voted against Friday's rate hike. "The government's concerns that interest-rate increases could dampen corporate investment appetite and household spending are likely to stay largely intact," the analysts say. The yen weakened after the announcement, hovering near 157.20 per dollar as the vote split cast doubt on the pace of further policy tightening. (megumi.fujikawa@wsj.com)

0550 GMT - U.S. Treasury yields edge lower in Asian trade, as the Federal Reserve's interest-rate hike on Wednesday looks to have convinced investors about the Fed's intention to lower inflation back to target. "The medicine from the Fed is working and may have prevented the rates sell-off from spiraling out of control," Commerzbank's Rainer Guntermann says in a note. "Bond markets stabilize with curves flattening amid lower long-end yields," the rates strategist says. The two-year Treasury yield is down 0.7 basis point at 4.681%, while the 10-year Treasury yield declines 1 basis point to 4.935%, according to Tradeweb. (emese.bartha@wsj.com)

0546 GMT - The U.S. Treasury's expanded long-end bond buybacks appear to have had limited success in lowering outright yields, but they have left a clear footprint in relative-value pricing at the long end, Deutsche Bank rates strategists say in a note. Since the Aug. 19 announcement, the 20-year maturity sector has outperformed both on the curve and in swap spreads, with these effects persisting even as long-end yields have risen above their preannouncement levels, they say. "The key reason is the 20-year sector's relative illiquidity and weaker investor demand, which leave greater scope for expanded buybacks to support valuations," they say. Another reason is the smaller 20-year issuance size, with just $168 billion annually compared with $480 billion for 10-year notes and $276 billion for 30-year bonds, they add. (emese.bartha@wsj.com)

0535 GMT - A local peak in long-end yields may be behind us, but the next one is likely still ahead, Societe Generale rates strategists say in a note. "A hawkish European Central Bank and Federal Reserve should reassure investors questioning central banks' inflation-fighting credibility," they say. The Bank of England's decision to pause and slow quantitative tightening sparked a gilt-led rally at the long end, while next week's Trump-Xi meeting could further support risk sentiment, they say. "However, the global rebuilding of term premia is not yet complete, and markets still have scope to price a more aggressive path of central bank rate hikes," according to the French bank's rates strategists. (emese.bartha@wsj.com)

0533 GMT - Societe Generale rates strategists raise their forecasts for 10-year German Bund yields, as the rise in long-end yields is not over, they say in a note. They expect the 10-year Bund yields to peak around 3.85% in the first quarter of 2027, they say. Near term, the U.S.-Iran conflict and energy remain the key drivers and the source of uncertainty for rates and market pricing of the European Central Bank's rate path, they say. "The speed of the recent ECB repricing has surprised many market participants, but the level of the terminal rate can easily be rationalized," they say. The 10-year Bund yield closed at 3.478% on Thursday, according to LSEG. (emese.bartha@wsj.com)

0526 GMT - ​Edmond de Rothschild Asset Management views current interest-rate levels as an opportunity to strengthen its investments in rate assets, Michael Nizard, head of multi-asset and overlay says in a note. The asset manager thus moves to a significant overweight position in bonds--particularly those with short to medium maturities--with a view to generating carry returns and building its portfolio, Nizard says. (emese.bartha@wsj.com)

0521 GMT - The Federal Reserve's unanimous vote Wednesday on an interest-rate hike is key, demonstrating that the Fed intends to preserve its independence in the face of potential political interference, says Edmond de Rothschild Asset Management's Michael Nizard in a note. "Growth has, in fact, held up better than expected, driven in particular by investment and the dynamism of sectors linked to artificial intelligence," the head of multi-asset and overlay says. The labor market, too, remains close to equilibrium, with no deterioration significant enough to justify maintaining an accommodative policy, Nizard says. At the same time, inflation is not moving close enough to the 2% central bank target, while geopolitical uncertainty adds to these persistent price pressures, fueling the rise in energy prices, he says. (emese.bartha@wsj.com)

0517 GMT - The balance of risks for U.S. Treasury yields has shifted to the downside relative to current forward pricing, following the Federal Reserve's unanimous 25-basis-point rate hike on Wednesday, SEB's Jussi Hiljanen says in a note. "The dot plot signals one further hike this year and leaves open the possibility of another in 2027," the chief rates strategist says. With markets discounting 75 basis points of additional tightening by summer 2027, SEB thinks maximum hawkishness in market pricing has been reached, reducing the likelihood of further major bond selloffs, he says. (emese.bartha@wsj.com)

0509 GMT - If the U.S. economy is as strong as Federal Reserve Chairman Kevin Warsh thinks, markets might see higher government bond yields, Mirabaud Asset Management's Andrew Lake says. "The next round of earnings will be key to seeing the effects of the Iran war and whether companies continue to be as bullish as the previous quarter," the CIO says. If so, that will continue to support equities and pressure government bonds, he says. Europe, the U.K., and Japan are not in the same situation, so while inflation is picking up, the capacity to raise rates much beyond current levels is limited and risks going into restrictive territory, Lake says. (emese.bartha@wsj.com)

0507 GMT - The 10-year U.S. Treasury yield is likely to stabilize near term, staying in the 4.90%-5.10% range, says SEB's Jussi Hiljanen in a note. The re-escalation of the Middle East conflict has pushed bond yields higher, while this week's hawkish Fed message added to the pressure, the chief rates strategist says. "With short positioning stretched and Fed pricing aggressive, we expect the 10Y Treasury yield to consolidate in a 4.90-5.10% range for now." (emese.bartha@wsj.com)

(END) Dow Jones Newswires

September 18, 2026 01:55 ET (05:55 GMT)