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.

1020 GMT - The Norges Bank rate decision on Thursday is close to a 50/50 call, although Nordea leans towards a hike to 4.50%. On the one hand, core inflation has surprised on the downside in recent months, chief economist Kjetil Olsen writes. Combined with signs of somewhat weaker capacity utilization, this argues for waiting until more information is available on both inflation and activity before tightening further, he says. On the other hand, inflation is still too high. Energy prices have risen sharply since June and market expectations for policy rates across Norway's trading partners have shifted materially higher. "There are therefore credible arguments on both sides, and we expect these to feature prominently in the monetary policy committee's deliberations." (dominic.chopping@wsj.com)

1019 GMT - U.K. PMI data shows price pressures strengthened in September, which will worry Bank of England policymakers and boost the case for interest-rate hikes, RSM U.K.'s Thomas Pugh says in a note. The input and output prices balances both rose to three-month highs, the PMI data show. The outlook looks even more challenging, as rising energy prices risk pushing inflation above 4% early next year, he says. That will squeeze households' real incomes and potentially force the BOE to hike rates later this year, Pugh notes. Tax rises at the government budget announcement next month could weigh on growth too. "The next six months are likely to feel like a return to stagflation as inflation rises and growth slows," he says. (edward.frankl@wsj.com)

1017 GMT - The Riksbank will keep its powder dry for now, but prepare the market for rate hikes ahead, Nordea chief analyst Torbjorn Isaksson writes. External factors are the main reasons for the Riksbank to tighten monetary policy, he says. Above all, the war in the Middle East is pushing up oil prices and contributing to higher gas prices in Europe. In turn, this spills over to Sweden through higher fuel and electricity prices, prompting a significant upward revision to inflation forecasts, he says. In addition, the krona is on a clear weakening trend, which also warrants higher inflation forecasts, he adds. Nordea expects the Riksbank to keep the policy rate unchanged at 1.75% Thursday before raising in November and then again in February next year to a peak of 2.25%. (dominic.chopping@wsj.com)

1016 GMT - Norges Bank's rate decision on Thursday is highly uncertain, but a hike remains the most likely outcome, Handelsbanken's Norway chief economist Marius Gonsholt Hov writes. Views are divided on whether the key policy rate will be raised, but Handelsbanken leans towards an increase to 4.50%, which would be in line with the signals from Norges Bank's June report, it says. While core inflation has been lower than Norges Bank expected over the past three months, wage growth remains clearly too high. At the same time, international policy rate expectations have risen considerably, he adds. The new rate path will probably be revised slightly lower at the short end, but somewhat higher a bit further out, the bank says. (dominic.chopping@wsj.com)

1014 GMT - The risks of a further euro depreciation in the near term are building, MUFG Bank's Derek Halpenny says in a note. Chancellor Friedrich Merz's local election defeat for his Christian Democratic Union Party at the weekend helped reinforce those risks, he says. Elevated energy prices and French politics also pose potential headwinds. The technical backdrop for the euro also doesn't look good as it breaks below key levels, he says. "While the move is still more of a dollar story, the macro backdrop in the eurozone could start to weaken if the negative energy terms of trade shock starts to undermine business confidence." The euro falls to an eight-week low of $1.1405, LSEG data show. (renae.dyer@wsj.com)

0948 GMT - Renewed inflationary pressures as seen in the U.K. PMI data for September cement the Bank of England's tilt toward higher interest rates, Capital Economics' Ashley Webb says. Climbing energy prices pushed up input and output prices, suggesting firms are passing energy cost increases to customers via higher selling prices, he says in a note. "Both of these measures remain below their highs a few months ago, but they signal price pressures are starting to grow again," Webb says. While inflation could climb to around 4.2% early next year, the weak labor market will likely prevent second-round effects. "That's why we think interest rates will rise from 3.75% to 4.25% by early next year, rather than to 4.75% as investors expect." (edward.frankl@wsj.com)

0938 GMT - Talks between President Trump and Chinese leader Xi Jinping Thursday won't deliver breakthrough on AI chips and rare earths, Jefferies analysts say. The Trump administration's plans for a Board of Trade to oversee a reduction in tariffs across a range of products is "the single most possible deliverable" from talks, the analysts say. On the U.S. side, Boeing aircraft and medical devices could benefit from talks, with the analysts taking encouragement from recent comments by U.S. Trade Representative Jamieson Greer. Agricultural and energy products could also benefit, they say. The two countries won't touch sectors of strategic importance, the analysts say. "We would not price in semiconductor or rare-earth relief." (josephmichael.stonor@wsj.com)

0934 GMT - The Riksbank is likely to hold its key policy rate at 1.75% Thursday, but Citi expects the rate path to signal that hikes are becoming more likely by year-end, economist Giada Giani writes. While inflation remains well below 2% on most metrics and unemployment is high, the economy is gathering momentum and the Swedish krona is weakening, Giani says. The bank now expects one 25 basis-point hike in December and one in spring 2027, having previously expected the policy rate to remain on hold throughout 2027. "The Riksbank can still enjoy more room to wait before tightening monetary policy compared to other central banks, and this in itself makes for a relatively more optimistic growth outlook for the Swedish economy." (dominic.chopping@wsj.com)

0933 GMT - The eurozone's composite PMI significantly exceeds expectations this month, defying renewed escalation in the Middle East, Commerzbank's Vincent Stamer says in a note. The increase to 53.1, from 52.0 in August, marks the highest level since April 2023. "The PMI is thus in a range where the eurozone economy has historically grown at an above-average rate--that is, by at least 0.4% compared with the previous quarter," Stamer says. Sentiment among services providers in particular improved dramatically, recovering from the slump suffered in the spring. The PMI data show the European economy is slowly gaining momentum. However, continued high energy prices could further fuel inflation in the coming year and potentially weigh on growth, Stamer adds. (edward.frankl@wsj.com)

0930 GMT - September's eurozone PMIs show economic activity remains robust despite surging oil prices, low water levels and supply-chain disruptions, and this increases prospects of another interest-rate hike, ING's Carsten Brzeski says in a note. The eurozone composite PMI rose to 53.1 in September from 52.0 in August, its highest level in almost three-and-a-half years. "Today's PMI readings make it more difficult for even the European Central Bank's most dovish policymakers to rule out another rate hike," Brzeski says. The eurozone looks set to deliver decent third-quarter growth, he says. The surveys also show inflationary pressure have built again, with both input costs and output prices increasing at the highest rates in four months, Brzeski says. (edward.frankl@wsj.com)

0856 GMT - CaixaBank's stock is no longer at a large premium despite strong growth, UBS's Ignacio Cerezo and Alvaro Fernandez-Garayzabal write. The higher-for-longer rate environment means rate-geared banks should benefit, UBS says, with Caixa one of the best options for this in Iberia. UBS expects Caixa's earnings per share growth to perform ahead of other Spanish domestic banks. It still has a premium of around 20% to the European sector, but underperformance since its first-half results means the company has a more attractive valuation. UBS raises its recommendation on the stock to buy from neutral, and increases the target price to 14.90 euros from 12.40 euros. Shares are up 1.3% at 13.15 euros. (michael.hennessey@wsj.com)

0854 GMT - U.K. government bond yields rise, albeit less than their eurozone peers, after flash estimate U.K. purchasing managers indices came in weaker than expected. All else being equal, this is a bond-friendly outcome for gilts, slowing any rise in gilt yields.The composite flash estimate came in at 51.7, slightly below the 52.0 level analysts expected in The Wall Street Journal's poll. Gilt yields track moves higher in eurozone bond yields after French, German and eurozone composite PMIs were significantly above expectations. The 10-year gilt yield last trades at 5.227%, up 0.4 basis points, according to Tradeweb. Equivalent eurozone bond yields rise by between 1 and 1.5 basis points. (emese.bartha@wsj.com)

(END) Dow Jones Newswires

September 23, 2026 06:20 ET (10:20 GMT)