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

0613 GMT - Australia should avoid a tariff-driven recession, not least because of the scope for interest-rate reductions, according to AMP Chief Economist Shane Oliver. While Australia's central bank went into the Covid-19 pandemic with the country's cash rate at 0.75%, Oliver points out that a current rate of 4.10% provides plenty of room for maneuver. He sees no need for an emergency rate-setting meeting by the Reserve Bank of Australia but reckons there may be a 35% chance that its next scheduled meeting in May ends with a 0.50 percentage-point cut. Upside risks to inflation from weakness in the Australian dollar are likely to be minor compared with potential growth shocks or increased goods supply, he adds in a note. (stuart.condie@wsj.com)

0606 GMT - LBBW is comfortable with its forecasts for the 10-year German Bund yields, says senior fixed income analyst Elmar Voelker. The German bank has left its forecast unchanged at 2.80% at end-2025 and at 3.00% at mid-2026, he says in a note. German Bunds outperformed U.S. Treasurys last week as investors sought European alternatives to weakening U.S. assets in the tariff turmoil. Last week, the 10-year Bund yield moved between a high of 2.720% and a low of 2.432%, having finished the week little changed at 2.534%, according to Tradeweb. (emese.bartha@wsj.com)

0555 GMT - A pause in cuts is no longer an option for the European Central Bank's rate setters, ING's Carsten Brzeski says. U.S. tariffs on European goods, and Washington's more generally protectionist policy under President Trump, have revived growth fears for a eurozone that appeared to have a rosier horizon in the shape of planned European investment in defense and infrastructure, Brzeski tells investors in a note. "The strengthening of the euro as well as the drop in energy prices, has added to the disinflationary forces the current trade tensions will have for the eurozone," he says. The ECB, which looked to be mulling a pause in its recent series of cuts to interest rates, will have no choice but to continue to ease rates when its governing council meets Thursday in Frankfurt, he says. (joshua.kirby@wsj.com; @joshualeokirby)

0553 GMT - The European Central Bank's meeting this week is in focus, with a 25 basis point interest-rate cut widely anticipated. "We think an April cut is fully priced," Morgan Stanley Research's Lorenzo Testa and Maria Chiara Russo say in a note. "We don't expect any surprises." Money markets fully price a 25-basis-point rate cut for the ECB's rate decision on Thursday, according to LSEG data. Meanwhile, the strategists also expect duration in European bond markets to continue outperforming as it should remain more insulated from demand concerns. (emese.bartha@wsj.com)

0538 GMT - U.S. and European rates showed striking divergence last week, with weakness in U.S. Treasurys and relative resilience in eurozone bonds, says Danske Bank Research's Kirstine Kundby-Nielsen. "This highlights that investors have increasingly sought out European alternatives as U.S. remains vulnerable given the large amount of fiscal and economic uncertainty," the analyst says in a note. Ten-year U.S. Treasury yields ended 50 basis points higher at 4.493% last week, while German Bund yields finished 3.5 basis points lower at 2.534%, according to Tradeweb data. The 10-year U.S. Treasury yield is at 4.466%, down 2.7 basis points from Friday, according to Tradeweb. (emese.bartha@wsj.com)

0515 GMT - Singapore may enter a technical recession this year, says Selena Ling of OCBC's Global Markets Research, in a research report. "A technical recession is possible as the brunt of the initial U.S. tariff announcements has wrecked significant havoc on financial markets in April and real economic fallout is anticipated in the coming months," says the chief economist and head of Global Markets Research & Strategy. Singapore's GDP could contract again sequentially on-quarter on a seasonally adjusted basis in 2Q, tipping the economy into a technical recession, Ling says. This assumes there's no near-term improvement in global trade and growth prospects arising from negotiations on tariff front that results in more sustained lifting of reciprocal tariffs, Ling adds. (ronnie.harui@wsj.com)

0510 GMT - China's economic growth likely eased in the March quarter amid pressure on multiple fronts, Moody's Analytics says. It expects GDP growth slowed to 4.7% on year from 5.4% in the December quarter. The economy is expected to have grown just 0.9% quarter on quarter, it says in a note. "Exports are up against escalating U.S. tariffs, and domestic demand is sluggish amid high unemployment and a correcting property market," it says. Robust government spending and higher bond issuance in the opening months of the year will cushion some of the pain, it adds. The GDP data are due Wednesday. (monica.gupta@wsj.com)

(END) Dow Jones Newswires

April 14, 2025 02:14 ET (06:14 GMT)

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