The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0922 GMT - An extended Bank of England interest-rate pause is more likely than hikes, Capital Economics' Ruth Gregory says in a note. The energy-price shock prompted by the Iran war is likely to extinguish U.K. growth and add to the already-high unemployment rate, she says. While a larger and more persistent inflation shock could force the BOE to hike, any tightening cycle would probably be small and short, she says. After inflation was unchanged at 3.0% in February, the rise in oil prices probably raised inflation by 0.3 percentage points in March. "In our baseline scenario, we now think CPI inflation could rise to a peak of 4.6% in the fourth quarter," Gregory says. (edward.frankl@wsj.com)
0854 GMT - A return to the Bank of England's 2% inflation target now looks like a distant memory given the jump in energy prices, Deutsche Bank's Sanjay Raja says in a note. "The bump back in inflation will put to rest any talk of rate cuts this year. And the risks that the BOE reverses course and hikes the bank rate can no longer be dismissed," Raja says. Pump prices have risen by nearly 7% in March and likely to rise by a similar amount in April, he says. The potential for spillovers into other parts of the consumer-price index basket is rising, with fertilizer prices on the rise, shipping costs surging, and the prospects of second-round effects no longer negligible. Inflation is set to peak near 3.5% later this year, he says. (edward.frankl@wsj.com)
0851 GMT - Central banks across Asia have struck a cautious tone around tensions in the Middle East, says OCBC's Lavanya Venkateswaran. The pain from higher energy prices and reduced oil and natural gas imports is akin to a gut punch for economies like India, the Philippines, Thailand and Vietnam, she says. These economies are net energy importers and, absent subsidies, will see building inflationary pressures. Authorities in India, Thailand and Vietnam can shift some of the subsidy burden off-budget, but that kicks the can down the road, the senior economist says. Indonesia and Malaysia can buffer the impact with fiscal cushions, but the duration and persistence of higher oil prices will significantly affect their ability to keep fiscal backstops in place. (fabiana.negrinochoa@wsj.com)
0844 GMT - Airline stocks rise after oil prices fell on reports that the U.S. sent Iran a 15-point plan to end the Middle East conflict and that Iran would allow "non-hostile vessels" through the Strait of Hormuz. Air France and Wizz Air were the biggest gainers--rising 3.9% and 3.1%,respectively. Closely behind are British Airways owner International Consolidated Airlines Group, easyJet and Lufthansa--rising 2.5%, 2.6% and 2.3%, respectively. Brent crude is down 4.5% at $95.72 a barrel, while WTI falls 3.9% to $86.28 a barrel. (ian.walker@wsj.com)
0845 GMT - The Middle East crisis is shifting some rate trajectories in Asia, OCBC economists say. Some central banks previously biased to further--albeit marginal--easing such as BOT, BSP and the RBI will close the door on rate cuts, says Lavanya Venkateswaran. OCBC has ditched its 50bp rate-cut call for Indonesia, expecting it to remain on hold in 2026. The odds of rate hikes are increasing in some places, but much depends on the duration and persistence of higher energy prices. Since policy rates are already at or close to neutral for most of the region, Venkateswaran thinks policymakers can afford to wait. This allows them to hedge against stagflation risks, which are more pronounced than during the 2022 shock as inflation is higher and policy rates aren't at record lows. (fabiana.negrinochoa@wsj.com)
0837 GMT - Eurozone government bond yields fall, tracking moves in U.S. Treasury yields, amid tentative optimism about a potential resolution to the Middle East conflict. The German 10-year Bund yield drops 5 basis points to 2.967%, while yields on other bonds fall by more than that, according to Tradeweb. Yield spreads narrow as a result. The 10-year Italian BTP-German Bund yield spread narrows 4 basis points to 88 basis points. (emese.bartha@wsj.com)
0831 GMT - Yields on U.K. government bonds fall, along with U.S. and eurozone bond yields, following media reports that the U.S. has proposed a cease-fire in the Middle East. The U.S. has sent Iran a 15-point plan to end the war, The Wall Street Journal reports, citing officials. Market sentiment has improved as a result and eased concerns about prolonged tensions in the Gulf region. U.K. inflation data for February showed annual headline inflation at 3.0% and annual core inflation at 3.2%, in line with the consensus forecast by economists in a WSJ poll. Ten-year gilt yields fall 8 basis points to 4.855%, Tradeweb data show. (miriam.mukuru@wsj.com)
0824 GMT - The Swiss franc falls to a six-week low against the euro as tentative hopes for a resolution to the Middle East conflict reduce demand for safe-haven assets. The U.S. has sent Iran a 15-point plan to end the war, The Wall Street Journal reports, citing officials. President Trump said Tuesday he was more confident of Iran's willingness to reach an agreement. Mediators from Turkey, Egypt and Pakistan are pushing for a meeting between U.S. and Iranian officials in the next 48 hours. Meanwhile, Swiss National Bank Chair Martin Schlegel and SNB member Petra Tschudin on Tuesday also reiterated the central bank's increased willingness to use interventions to curb the franc's strength. The euro rises to a high of 0.9168 francs. (renae.dyer@wsj.com)
0821 GMT - U.K. inflation's downward trend over the last six months is likely to be challenged as the Iran war puts pressure on input prices and supply chains, says Pieter Reynders, partner at McKinsey & Co. Annual inflation was unchanged in February at 3.0%, having fallen from 3.8% in September. There was a welcome easing in food and nonalcoholic beverages, though some nonessential categories, such as restaurants and hotels remained elevated, he says in a note. "Inflation remains the top concern for U.K. consumers, cited by 52%, up from 50% a year ago," Reynders says, citing McKinsey data. Attention will now turn to how quickly any renewed pressure on energy and input costs feeds through to prices and behavior, he says. (edward.frankl@wsj.com)
0814 GMT - Bitcoin rises as risk appetite recovers on more positive developments in the Iran war. The U.S. has sent Iran a 15-point plan to end the war, WSJ reports, citing officials. Separately, President Trump on Tuesday told reporters during an Oval Office event that he was more confident of Iran's willingness to come to an agreement. Mediators from Turkey, Egypt and Pakistan are pushing to have a meeting arranged between U.S. and Iranian officials in the next 48 hours. However, Iran has signalled a high bar for re-entering negotiations. A spokesman for Iran's armed forces also suggested the U.S. was negotiating with itself to get out of a "strategic defeat." Bitcoin rises 1.3% to $70,978, LSEG data show. (renae.dyer@wsj.com)
0811 GMT - Inflation in the U.K. could rise to a peak of about 4.6% in the fourth quarter of 2026, Ruth Gregory at Capital Economics says in a note. The annual rate of inflation remained at 3.0% in February, far higher than the eurozone's rate of 1.9%. Due to the energy shock triggered by conflict in the Middle East, elevated petrol and diesel prices will likely drive inflation higher in the coming months. "And that's before the indirect boost from businesses passing on some of their energy costs in the prices of non-energy items," Gregory says. Still, at this stage an extended interest-rate pause is more likely than rate hikes given the expected hit to growth and the labor market from higher energy prices, she says. (don.forbes@wsj.com)
0807 GMT - While U.K. inflation is set to accelerate in the months ahead, the bar for the Bank of England to raise interest rates remains high, KPMG U.K. chief economist Yael Selfin says. Annual inflation was 3.0% in February, unchanged from January. "Weakness in the labor market and the wider economy should limit the extent to which inflation becomes more persistent," she says in a note. If the Middle East conflict concludes in the coming weeks, the bank could keep rates on hold until the second half of this year and resume its easing cycle in November, she says. However, there remains risks that inflation could push sharply up in the third quarter onward if disruptions to energy supplies persist, she says. (edward.frankl@wsj.com)
(END) Dow Jones Newswires
March 25, 2026 05:22 ET (09:22 GMT)
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