The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

1038 GMT - Elevated government borrowing could prevent gilt yields from falling as investors place a risk premium on U.K. government bonds, XTB's Kathleen Brooks says in a note. U.K. public sector net borrowing increased to 24.3 billion pounds ($32.6 billion) in April, a 25% rise from the same period a year ago, data showed earlier. Ten-year gilt yields last trade at 4.920%, down 3.9 basis points on the day but still the highest level among developed-market peers, Tradeweb data show. (miriam.mukuru@wsj.com)

1028 GMT - The cost of insuring euro-denominated credit against default falls due to optimism around the possibility of the U.S. and Iran reaching a peace agreement. U.S. secretary of state Marco Rubio told reporters on Thursday that there are signs of progress in the negotiations with Iran. The iTraxx Europe Crossover index, which tracks euro high-yield credit default swaps, falls 4 basis points to 276bps, S&P Global Market Intelligence data show. The iTraxx Europe Main index, which tracks euro investment-grade CDS, falls 1bp to 56bps. (miriam.mukuru@wsj.com)

1016 GMT - The risk premium in sterling has plenty of room to widen on U.K. political uncertainty as not much is currently priced in the spot market, J. Safra Sarasin Sustainable Asset Management strategist Claudio Wewel says in a note. "Aside from small fractures, the pound has hardly reacted, so far, to the current political crisis." Instead, investors' concerns are reflected in the options market where traders are bracing for potential political turbulence to weaken sterling. Sterling's spot price looks exposed to falls if Prime Minister Keir Starmer were to lose a potential leadership challenge later this year, he says. Sterling falls 0.1% to $1.3420 against a stronger dollar but the euro falls 0.1% to 0.8643 pounds.(renae.dyer@wsj.com)

1003 GMT - A broader Chinese property-sector recovery still needs time, HSBC analysts say in a note. Recent data for tier-one cities show an improvement in property sales both in terms of primary and secondary markets, HSBC notes. However, the overall property sector has yet to fully stabilize, with April data showing property investment fell 20% on year. "Smaller cities may still need more policy support from the central government," HSBC says. It would also take some time for the stabilization of the property sector to boost consumption, the bank adds. (tracy.qu@wsj.com)

0957 GMT - Services are likely to be a bright spot for China's consumption sector, according to HSBC analysts in a research note. Services-related retail sales have grown 5.6% year to date, compared with muted overall retail-sales growth of 1.9% year to date, they note. "To some extent this may be reflective of a trend in improved demand for experiential services as opposed to owning expensive goods post-pandemic," they say. HSBC expects to see more emphasis on expanding consumption demand toward services given the great potential there. While some local governments have been providing services consumption coupons, a nation-wide campaign will be more effective, they say. (tracy.qu@wsj.com)

0955 GMT - China's retail sales growth is likely to be pressured this year, according to HSBC analysts. They note that the growth slowed to 0.2% on year in April, the softest reading since the end of 2022. Trade-in subsidy policies appear to be losing momentum, both in their magnitude and effectiveness, the analysts write in a research note. A relatively weak labor market and continued property-sector challenges are among the other headwinds. "Taking all these factors into account, we now see retail sales growing 2.8% year-on-year in 2026, compared to our previous forecast of 5.2%," HSBC says. (tracy.qu@wsj.com)

0948 GMT - The Middle East conflict may have a limited impact on China's consumption for now, according to HSBC analysts in a research note. The most significant direct impact of the Middle East conflict on prices has been at the producer level, though there have also been increases in household fuel prices, the analysts say. "While there is a risk of eventual pass-through of higher energy costs filtering through to the economy, the overall softer domestic demand environment may make it difficult for businesses to fully pass on the cost," they note. (tracy.qu@wsj.com)

0930 GMT - Singapore's GDP growth data for 1Q is likely to be revised higher from advance estimates as manufacturing turned out to be stronger than expected, DBS's economics team says. DBS expects real GDP growth to be raised to 5.4% on year and 0.4% on quarter from 4.6% and -0.3% respectively. That reflects robust manufacturing, backed by electronics by strength in electronics production. The data should also confirm solid construction momentum and services expansion. While the economy is likely to slow over the course of the year due to disruptions stemming from the Middle East conflict, growth started the year on a strong footing, and trade appears resilient at the start of 2Q, the economists say. Revised data is due Monday. (fabiana.negrinochoa@wsj.com)

0930 GMT - Sterling is the second-best performing G-10 currency this week despite weak U.K. economic data, MUFG Bank's Derek Halpenny says in a note. This partly reflects lower-than-expected U.K. consumer price inflation data earlier in the week easing fears over inflation risks and causing U.K. government bond yields to ease after recent sharp rises. While weak data have prompted markets to pare U.K. interest-rate rise expectations, close to two rate increases remain priced in for this year and this looks plausible, he says. Consumer prices were lower but producer price index data were stronger than expected, with hefty pipeline inflation still to come through, he says. The euro falls 0.1% to 0.8644 pounds. Sterling trades flat at $1.3427. (renae.dyer@wsj.com)

0928 GMT - The dollar could rise if Federal Reserve governor Christopher Waller hints at raising interest rates in a speech later, ING's Chris Turner says in a note. Waller's speech at 1400 GMT could be the biggest market mover on a quiet Friday as he could provide a better steer on the Fed's thinking, he says. "He [Waller] typically delivers very clear speeches on the economic outlook, and his most recent speech made the case for a prolonged pause after he had voted for a rate cut in January." ING expects the DXY dollar index to remain supported in a 99.00-99.50 range Friday with the risk of more significant gains if Waller shifts towards backing rate rises. The DXY trades flat at 99.279. (renae.dyer@wsj.com)

0914 GMT - Yields on German government bonds, or Bunds, extend falls slightly after German Ifo business sentiment data beat expectations but remained weak. Sentiment improved from low levels and the increase was insufficient to ease concerns about economic damage caused by high oil prices and Middle East tensions. The Ifo Institute's business-climate index climbed to 84.9 in May, better than the consensus in a WSJ poll for 84.1, but not far above April's 84.5--the weakest reading since May 2020. Given that these figures follow Thursday's weak purchasing managers' surveys, the European Central Bank could stay cautious about raising interest rates. Ten-year Bund yields fall 4.5 basis points to a one-week low of 3.053% after the data, Tradeweb data show. (jessica.fleetham@wsj.com)

0911 GMT - The U.K. faces slow economic growth and weak tax revenues, putting pressure on public finances, Tickmill Group's Patrick Munnelly says in a note. U.K. public sector net borrowing increased to 24.3 billion pounds ($32.6 billion) in April, a 25% rise from the same period a year ago. U.K. public finances could worsen as borrowing costs remain high. Ten-year gilt yields fall 3.5 basis points on the day to last trade at 4.924%, but remain relatively high compared to developed-market peers, Tradeweb data show. (miriam.mukuru@wsj.com)

(END) Dow Jones Newswires

May 22, 2026 06:38 ET (10:38 GMT)

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