The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0817 ET - The decline in Germany's Ifo index shows the Middle East war has blasted away resurgent optimism among businesses, ING's Carsten Brzeski says in a note. "Coming from the highest level since last summer, Germany's most prominent leading indicator took a severe hit as the war in the Middle East, soaring energy prices, and new uncertainty dented previous optimism." The index declined to 86.4 in March, from 88.4. However, the conflict has changed a lot but not everything. The situation isn't yet comparable to 2022, when energy prices and fiscal stimulus during the pandemic fueled an inflation wave and then a wage-price spiral, Brzeski says. The drivers of Germany's rebound, especially fiscal stimulus for defense and infrastructure, are still present, he says. (edward.frankl@wsj.com)
0807 ET - Bitcoin rises to a one-week high on cautious optimism for a resolution to the Middle East conflict. The U.S. sent Iran a 15-point plan to end the war, The Wall Street Journal reports. The plan centers around President Trump's previous demands of Iran, including dismantling main nuclear sites and fully reopening the Strait of Hormuz. Mediators are pushing for a U.S.-Iran meeting by Thursday. However, Iran has indicated a high bar to re-enter cease-fire negotiations. "Crypto markets are trading more in line with broader risk sentiment again, stabilizing after earlier weakness tied to the oil-driven risk-off move," Saxo Bank analysts say in a note. Bitcoin rises 2.6% to a high of $72,0003, LSEG data show. (renae.dyer@wsj.com)
0804 ET - Middle East countries' default protection costs remain elevated as Middle East tensions linger. The U.S. has sent a 15-point plan to end the war with Iran, leading to a mild improvement in market sentiment, although uncertainties remain. Bahrain's 5-year credit default swaps last trade at 309 basis points, compared to 214bps prior to the Middle East war, S&P Global Market Intelligence data show. Emirate of Dubai's 5-year CDS last trade at 86bps, compared to 50bps before the war. (miriam.mukuru@wsj.com)
0758 ET - Recent Canadian economic data points to a weaker start to 2026, with broad labor market weakness in January and February and very weak trade numbers in January, signally slower aggregate demand, Scotiabank says. Its economists now expect GDP growth for 1Q will undershoot earlier expectations, which is likely to mean average growth of 1.3% for 2026. Still, Scotiabank reckons there are several forces that should support a recovery later in the year and into 2027, including fading tensions, past rate cuts feeding through, and government spending. As a result, it expects growth to accelerate to 2% in 2027. (robb.stewart@wsj.com; @RobbMStewart)
0740 ET - Although nearterm growth in Canada has softened, it's likely to be a temporary slowdown and so not something the Bank of Canada will react to, Scotiabank reckons. It also doesn't expect the central bank will react to the direct impact of higher oil prices on inflation, even if the shift in the balance of inflation risk does argue for caution. As a result, Scotiabank analysis assumes the Bank of Canada will begin gradually removing monetary stimulus and move toward a more neutral stance by year end. That suggests it will leave interest rates on hold near-term, until the USMCA renegotiations are resolved, before lifting rates three times in the second half of this year. (robb.stewart@wsj.com; @RobbMStewart)
0723 ET - The cost of insuring euro credit against default declines slightly as market sentiment improves after the U.S. sent a 15-point plan to end the Middle East war. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 12 basis points to 330bps, after hitting an 11-month high of 365bps on Monday, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0703 ET - The sharp worsening in March's Ifo survey reflects German companies' legitimate concerns about the Iran war, Commerzbank's Joerg Kraemer says in a note. The headline business-climate index fell to 86.4 in March, from 88.4 in February, with all major sectors affected. The expectations index, which gauges the outlook for the six months ahead, plummeted to 86.0 from 90.2. "If the war in the Middle East and the closure of the Strait of Hormuz do not end quickly, the economic damage signaled by today's slump in Ifo business expectations will eventually materialize," Kraemer says. In that case, little of the economic upswing economists harbored recently would remain. But if the war ends in a few days, Ifo's index would recover in April, he adds. (edward.frankl@wsj.com)
0631 ET - Liquidity at the front end of the U.S. Treasury yield curve has deteriorated amid elevated volatility since the onset of the Middle East conflict, Morgan Stanley strategists say in a note. This has led to wider bid-ask spreads and high volumes signaling forced flows, they say. "Elevated volumes alongside wider spreads suggest flows are driven by necessity rather than desire." Two-year bid-ask spreads have widened around 27% versus February, they say. "Large intraday yield swings are increasingly coinciding with thin liquidity conditions in the front end." (emese.bartha@wsj.com)
0555 ET - The U.K. inflation data due to be released in April will carry more weight than Wednesday's print as it will show the impact of the Middle East conflict, RBC Capital Markets strategists say in a note. Tensions in the Gulf region have led to a sharp rise in energy costs, raising the risk of high inflation around the globe. The latest data shows annual U.K. inflation in February was 3.0%, unchanged from the January inflation and in line with the consensus forecast by economists in a WSJ poll. (miriam.mukuru@wsj.com)
0559 ET - The euro is likely to struggle to sustain any recovery attempts against the dollar as energy prices remain elevated due to the Iran war, Commerzbank's Thu Lan Nguyen says in a note. Eurozone and U.S. interest rate expectations have risen roughly in tandem, suggesting the euro should trade steady versus the dollar rather than higher, she says. The eurozone is also "far more exposed to the current energy price shock than is the case for the U.S." While European Central Bank policymakers have expressed concerns over inflation risks, doubts over any rate rises could grow if there are more signs of a weakening economy, she says. The euro falls 0.1% to $1.1595. (renae.dyer@wsj.com)
0550 ET - Falling business sentiment suggests that the energy shock could upend hopes for a recovery in Germany, Franziska Palmas at Capital Economics says in a note. The Ifo business climate index fell to 86.4 in March from 88.4 in February. "The drop was entirely due to the expectations index, presumably reflecting concerns about the rise in energy prices and wider fallout from the war in the Middle East," Palmas says. But Germany looks more resilient compared with the energy shock of 2022. Price rises have so far been smaller, while a lot of energy-intensive production has been lost since then, Palmas says. "Germany also has more scope to loosen fiscal policy than most of its eurozone peers." Still, CapEcon downgrades its GDP forecast for 2026 to 0.5% from 0.8%. (don.forbes@wsj.com)
0549 ET - Markets lower their expectations of the Bank of England raising interest rates in the coming months on prospects of a possible end to the Middle East conflict. This follows media reports that the U.S. proposed a cease-fire in the Middle East. Investors fully price in two quarter-point BOE rate increases by the end of the year, having fully priced in three increases and a risk of a fourth at the start of this week, LSEG data show. (miriam.mukuru@wsj.com)
(END) Dow Jones Newswires
March 25, 2026 08:17 ET (12:17 GMT)
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