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.

0847 ET - Lower-than-expected U.S. employment numbers deepen an overnight decline in Treasury yields from lofty levels. September payrolls come at 29,000, lower than WSJ consensus of 84,000. July and August numbers are revised down by a total of 60,000. The unemployment rate ticks higher to 4.2%, versus estimates that it would stay at 4.1%. The data bolsters forecasts of a more moderate pace of interest rate increases by the Fed. Oil prices also cooperate, falling over 3%. The WSJ Dollar Index falls 0.3%. The 10-year Treasury yield is at 5.178%, down from 5.239% before the payrolls. The two-year slips to 4.718% from 4.773%. U.S. stock indexes extend early gains, with S&P 500 futures up 61.5 points. (paulo.trevisani@wsj.com; @ptrevisani)

0833 ET - The widening gap between yields in Treasurys and European government bonds is weighing on the euro versus the dollar despite resilient eurozone economic indicators, XS.com's Simon-Peter Massabni says in a note. "The divergence between strong eurozone fundamentals and a weak single currency highlight how yield differentials currently dominate price action," he says. Sticky energy prices are keep Treasury yields stubbornly high, reinforcing the dollar's yield advantage relative to European assets, he says. The euro rises 0.1% to $1.1248, having reached a 16-month low of $1.1214 Thursday, LSEG data show. The spread between the 10-year Treasury-German yield reaches the widest since June 2025 on Friday. (renae.dyer@wsj.com)

0827 ET - Any turning point in the selloff of French government bonds would happen only when there is a credible commitment to reduce the deficit over several years to put debt on a sustainable path, Capital Economics' Andrew Kenningham says. "While yields may fall a bit in the coming weeks, we remain pessimistic over the longer term because France's debt-to-GDP ratio looks set to continue rising for the foreseeable future," he says in a note. The draft budget unveiled Thursday, which could still be watered down, would reduce the deficit to 5.0% next year, not enough to stabilize the debt ratio. It looks increasingly likely a bigger fiscal crisis will be needed to prompt France's politicians to agree on a sustained program of fiscal consolidation, Kenningham says. (edward.frankl@wsj.com)

0825 ET - While the jump in eurozone inflation is still mainly driven by energy prices, broader inflationary pressures mount with energy prices set to stay elevated, ING's Bert Colijn says in a note. Inflation was 3.8% in September, the highest since 2023. Despite oil prices remaining somewhat below peaks in 2022 and this spring, Euro 95 petrol prices have reached an all-time high, weighing significantly on the inflation basket, he says. Now with food inflation ticking higher to 1.4% from 1.1% in August, and core inflation rising to 2.5% from 2.4%, there seems to signs of increased pass-through to other inflation categories, albeit this is very preliminary, Colijn says. The ECB still has work to do, he adds. (edward.frankl@wsj.com)

0825 ET - Despite rising supplies from the Middle East, crude-oil prices are still pushing inflation higher, KfW Research economist Stephanie Schoenwald says. Eurozone inflation rose to 3.8% from 3.2% in August, driven by the protracted energy-price shock. Reduced processing capacities due to the war have exacerbated shortages of refined products, particularly diesel, she says. Alongside households' medium-term inflation expectations picking up again, this strengthens the case for a further European Central Bank interest-rate hike, Schoenwald notes. But the situation is less serious than the inflation spike of 2022, with core inflation remarkably stable. "This gives the ECB the leeway to act prudently. A moderately restrictive key interest rate is likely to remain the appropriate response for the time being," she says. (edward.frankl@wsj.com)

0810 ET - Increased volatility in global government bond yields has triggered a broader liquidation of foreign exchange carry positions, hitting emerging market currencies, MUFG Bank's Derek Halpenny says in a note. Carry trades, which involve borrowing in low-yielding currencies to invest in higher-yielding currencies, tend to benefit from a low-volatility environment. "There has been an increasing risk of losses suffered in fixed income spreading as investors start to pare profitable positions to offset fixed income losses," Halpenny says. Volatility in emerging-market currencies has surged close to highs seen following the onset of the Iran war, particularly weakening the Mexican peso, he says. The dollar rises 0.3% to 18.3268 pesos, having reached a 10-month high of 18.4330 Thursday, according to LSEG. (renae.dyer@wsj.com)

0742 ET - The euro falls to a 10-week low against sterling as the spread between French and German government bond yields widened further. Sterling is also lifted by U.K. Prime Minister Andy Burnham promising to recast relations with the EU at a summit in November. Adding further support to sterling, an unexpected upward revision to U.K. second quarter economic growth earlier this week bolstered expectations for the Bank of England to raise interest rates. The euro falls to as low as 0.8501 pounds. The 10-year French-German yield gap rises to its highest level since November 2011 at 152.34 basis points, according to LSEG. (renae.dyer@wsj.com)

0718 ET - The gap between 10-year French government bonds and German government bonds extends even further, reaching its widest level since November 2011 due to concerns about France's fiscal position. The French-German 10-year government bond-yield spread widens beyond 150 basis points to reach 152.34 bps, LSEG data show. Rising political risks ahead of the 2027 presidential election is adding to investor worries, causing markets to demand extra compensation for buying French sovereign bonds compared to their German counterparts. Higher financing costs makes France's fiscal trajectory even less sustainable, Berenberg analysts say in a note. Ten-year French government-bond yields rise 2.3 basis points in contrast to a sharp 12 basis-point drop in their German equivalents. (miriam.mukuru@wsj.com)

0702 ET - Indirect inflationary effects in the eurozone are gradually emerging, Commerzbank's Vincent Stamer says in a note. "We expect that in the coming months, many businesses--particularly in manufacturing and food production--will pass on higher energy prices to their customers," he says. Eurozone headline inflation surged to 3.8% in September, from 3.2% in August, driven by higher energy costs. While there is little detail in the eurozone figures, national data show that the inflation rate for transportation services, such as passenger flights, rose in September, Stamer says. That's likely already a sign of the indirect effects caused by high energy prices, indicating that core inflation will climb toward 3.0% during the winter from 2.5% in September. (edward.frankl@wsj.com)

0600 ET - The cost of insuring French government bonds against default climbs to a multiyear high as fiscal and political concerns mount. France presented a proposed 2027 budget on Thursday, which included 43 billion euros in spending cuts and cost savings. Spreads between French and German 10-year government-bond yields widen further on Friday, hitting their highest since 2012, LSEG data show. "The proposed [French budget] measures do not resolve the country's longer-term fiscal challenge," UBS Global Wealth Management strategists say in a note. French 5-year sovereign credit default swaps climb 4 basis points to trade at 81bps, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0541 ET - Britain's solid economic performance should keep sterling supported against the euro on any fresh selloff in global government debt, Ebury strategist Matthew Ryan says in note. Renewed fears over the widening in yields between French and German government bonds has weighed on the euro this week, he says. At the same time, U.K. Prime Minister Andy Burnham's suggestion about opening a formal debate on the U.K. rejoining the EU has lifted sterling. "We don't expect this to provide any lasting support for sterling, however, as another referendum is both fanciful and, in our view, highly unlikely to see the light of day." The euro trades flat at 0.8516 pounds after reaching a 10-week low of 0.8504 Thursday, LSEG data show. (renae.dyer@wsj.com)

0523 ET - The euro stays slightly higher against the dollar after data showed eurozone inflation accelerated by more than expected in September. Annual inflation rose to 3.8% in September from 3.2% in August. Economists in a WSJ survey expected 3.6%. Core inflation rose to 2.5% in September from 2.4% in August, as expected. The euro rises 0.1% to $1.1247, little changed from before the data. Higher-than-expected inflation data from individual countries earlier this week meant Friday's figures weren't a big surprise. The euro reached a 16-month low of $1.1214 on Thursday, according to LSEG, driven by a stronger dollar on U.S. rate-rise expectations. The dollar falls on Friday after comments from the Federal Reserve's Philip Jefferson dampened rate-rise bets. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

October 02, 2026 08:47 ET (12:47 GMT)