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.

1024 GMT - Large cloud computing service providers and AI infrastructure companies, commonly known as hyperscalers, are expected to be the main drivers of capital expenditure growth in 2027, UBS's Arend Kapteyn says in a note. There is little evidence of capital spending spreading beyond hyperscaler AI investment, Kapteyn says. "Our equity analysts expect the [hyperscaler companies] to drive around 80% of global capex growth next year." (miriam.mukuru@wsj.com)

1016 GMT - The Bank of England is set to raise its key interest rate this week partly for insurance purposes, ING economists say in a note. "We expect a 7-2 vote to hike rates this week and, barring a collapse in energy prices, we think a follow-up move in February is likely too," they say. It comes as U.K. inflation approaches 4%, an important line in the sand for the BOE who suggested last year that second-round effects could become more likely once inflation surpasses this level. "We suspect this is still front of mind for many officials," the economists say. That leaves the bank in a strange situation of hiking not because economic data is telling it to, but because of risks presented by sharply higher energy prices, they say. (edward.frankl@wsj.com)

1002 GMT - The outlook for the Australian dollar remains positive even though the Reserve Bank of Australia is unlikely to raise interest rates further, ING's Francesco Pesole says in a note. The Australian dollar offers the best short-term yields in the G-10 for carry trades where investors borrow in low interest-rate currencies to buy currencies with higher rates, he says. While the environment is slightly challenging amid AI-related jitters, the Australian dollar should rise to $0.710 by year-end, he says. The RBA raised rates by 25 basis points to 4.85% but it was a 6-3 split decision and the central bank dropped its reference to future tightening. The Australian dollar falls 0.4% to a two-week low of $0.6960, LSEG data show.(renae.dyer@wsj.com)

0929 GMT - Brazil's election surprise is a reminder of how prediction markets can misprice political tail risks, MUFG's U.S. Macro Strategy team says. They reckon a "blue sweep" in the U.S. midterms is a closer call than the roughly 70% odds prediction sites imply. Their base case is that Democrats take the House and Republicans narrowly keep the Senate. That's the most market-friendly outcome, in their view, as a divided government would limit policy changes while preserving AI investment. In that event, they expect a decent equity rally and a muted bond reaction as traders refocus on underlying trends. A blue sweep would drag on equities, raising the risk of taxes that lower returns on future AI investment, while creating potential headwinds for crypto and defense. Under an unlikely red sweep, stocks would rip and bonds would dip. (fabiana.negrinochoa@wsj.com)

0913 GMT - Indonesia's economy is projected to have expanded 5.18% on year in 3Q, according to the median estimate of seven economists polled by The Wall Street Journal. That's down from 5.29% growth posted in 2Q. Weak consumer confidence and slower retail sales growth suggest that household spending is losing momentum amid gradually rising inflation, DBS economists Taimur Baig and Samuel Tse say in a note. Fiscal support likely helped sustain consumption among lower-income households, they add. Despite the forecast slowdown, DBS maintains its full-year growth estimate of 5.3%. The GDP data are due Thursday. (yingxian.wong@wsj.com)

0909 GMT - A possible change in control of Congress after Tuesday's midterm elections is likely to matter less for the dollar in the short term than might initially appear, Commerzbank's Norman Liebke says in a note. Polls suggest Republicans could lose their majority in the House of Representative and the Senate. In this case, governing would become more difficult for the Trump administration, he says. However, President Trump would retain considerable room for manoeuvre in key areas of his agenda, particularly foreign and trade policy, he says. "The structural political risks facing the dollar would therefore by no means disappear under a Democratic-controlled Congress." The DXY dollar index falls 0.1% to 101.677.(renae.dyer@wsj.com)

0844 GMT - The March 2037 green gilt's pricing looks cheap, making it potentially attractive to buyers at an auction of the bond at 1000 GMT, RBC Capital Markets strategists say in a note. Yields on the March 2037 green gilt have climbed to last trade at 5.277% from 5.236% on Monday, Tradeweb data show. In addition, the U.K. Debt Management Office announced reduced gilt sales over the coming months, which should support demand for government bonds, the strategists say. (miriam.mukuru@wsj.com)

0841 GMT - The euro could struggle to recover more meaningfully as oil prices remain elevated and French fiscal concerns linger, ING's Francesco Pesole says in a note. French government bonds failed to benefit from lower oil prices on Monday, suggesting spreads between 10-year French and German bond yields looks set to remain above 150 basis points, he says. "It therefore remains hard for the euro to shake out the lingering risk premium, and much more tangible progress is needed for oil to trade sustainably lower from here." The euro rises 0.1% to $1.1202 after reaching an 11-day high of $1.1237 driven by a weaker dollar, according to LSEG. (renae.dyer@wsj.com)

0838 GMT - The prospect of a Democratic sweep in Tuesday's U.S. midterm elections could put some pressure on the dollar, ING's Francesco Pesole says in a note. "Fears of tougher regulation could weigh on AI stocks (we've recently seen how that can hit the dollar), while markets could price in greater risks of decision-making gridlock around issues such as government funding and the debt ceiling." However, that's unlikely to be enough to trigger a structural directional shift in the dollar, he says. The dollar continues to respond to Federal Reserve interest-rate expectations which shouldn't face an immediate and direct impact from the midterms, he says. The DXY dollar index falls 0.1% to 101.699. (renae.dyer@wsj.com)

0828 GMT - Malaysia's central bank could leave its benchmark policy rate unchanged again at 2.75% on Thursday, according to four out of seven economists in a Wall Street Journal poll. The other three expect Bank Negara to raise interest rate by 25 bps. November's decision remains a close call after Bank Negara in September signaled possible policy normalization, DBS economists Taimur Baig and Samuel Tse say in a note. However, September data likely give policymakers room to wait until 1H 2027. Inflation remained in the lower half of the central bank's 2026 forecast range of 1.5%-2.5%, with headline inflation at 1.8% and core inflation at 1.7%. Meanwhile, 3Q GDP rose 5.3% and September exports jumped 54.5% on year. Fuel subsidies have also limited the pass-through of external cost pressures, DBS adds. (yingxian.wong@wsj.com)

0817 GMT - Government bonds look favorable given their high yields and attractive pricing, Ninety One's John Stopford says in a note. Yields on government bonds are close to multi-year highs, reflecting market pricing of higher public debt, inflation concerns, and expectations of higher interest rates. The bad news is already priced in, making government bonds attractive at current elevated yields and cheap pricing, Stopford says. (miriam.mukuru@wsj.com)

0811 GMT - Yields on U.K. government bonds, or gilts, climb as market become more cautious ahead of the U.S. midterm elections due on Tuesday. Investors also await the Bank of England's interest-rate decision due on Thursday when a quarter-point rate increase is widely expected. Focus will be on the BOE's communication on the current market expectations of three more rate increases by September 2027. The BOE could push back against this market pricing at the meeting. Ten-year gilt yields climb 4.5 basis points to last trade at 5.236%, Tradeweb data show. (miriam.mukuru@wsj.com)

(END) Dow Jones Newswires

November 03, 2026 05:24 ET (10:24 GMT)