The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0850 ET - The front end of the Canadian yield looks "cheap to us, on both an outright basis and tactically versus the US," says Andrew Kelvin, head of Canadian and global rates strategy at TD Securities. Traders are now pricing in nearly three quarter-point rate increases from the Bank of Canada before year's end, in anticipation of higher energy prices lifting inflation. Kelvin says the selloff in short-term government of Canada bonds doesn't reflect underlying domestic conditions that include a weak labor market, excess spare capacity, and a sharp slowdown in core inflation. Core CPI strips out volatile items like food and energy. Kelvin says there is a possibility that BOC might have to raise rates, "but we'd emphasize the near-term risks probably skew toward easing." (Paul.Vieira@wsj.com; @paulvieira)
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)
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)
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)
0627 ET - Oil prices extend losses, plunging more than 5% as diplomatic efforts to end the Iran war overshadowed continued military strikes and the effective blockade of the Strait of Hormuz. In mid-morning European trading, Brent crude is down 5.4% to $94.82 a barrel, while WTI falls 5% to $85.23 a barrel. Still, "the conflict has triggered widespread energy stress, including surging diesel prices, fuel shortages in multiple countries, and increased demand for alternative supplies, while uncertainty over negotiations and ongoing attacks continues to keep markets highly volatile," says Soojin Kim, analyst at MUFG. (giulia.petroni@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)
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)
0527 ET - U.K. inflation data for February showed the annual headline inflation at 3%, unchanged from January and in line with the consensus forecast by economists in a WSJ poll. The steady inflation data and decelerating wage growth indicate that U.K. interest rates are still relatively restrictive, EFG Asset Management's Joaquin Thul says in a note. The Bank of England is likely to keep interest rates unchanged at 3.75% at the April policy meeting, he says. (miriam.mukuru@wsj.com)
0522 ET - 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)
0454 ET - 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)
(END) Dow Jones Newswires
March 25, 2026 08:50 ET (12:50 GMT)
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