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.

0745 GMT - Investors should expect a much more hostile regulatory environment for cryptocurrencies under a Democratic Congress, according to Kyle Rodda at trading platform Capital.com. "Certainly, we won't see as much pro-crypto legislation pass under this Congress," he says. The bitcoin market responded in muted fashion to the Democrats' sweeping midterms victory, Rodda notes. Crypto assets are struggling for direction after being caught between prospects for falling tech stocks--often negative for bitcoin--and a weaker dollar, which tends to lend a boost. Bitcoin is 0.3% higher at $78,103. (joseph.wilkins@wsj.com)

0742 GMT - The dollar stays weaker after reaching a one-month low against a basket of currencies in Asian trade as the Democrats were firmly on course to take control of both Congress and the Senate in the U.S. midterm elections. The market reaction reflects concerns about growth if Democrats step in to curb AI-related investments rather than "generic political uncertainty," Danske Bank's Kirstine Kundby-Nielsen says in a note. However, the dollar's weakness won't last, she says. The outcome improves predictability in fiscal policy, lowers the risk of deficit-increasing policy changes, and sets guardrails for Trump's political nominations. This is positive for the dollar over the medium-term, she says. The DXY dollar index drops 0.5% to 101.484 after hitting a low of 101.245 earlier. (renae.dyer@wsj.com)

0740 GMT - The sluggishness of recovery in Saudi Arabia's nonoil sectors looks set to continue next year as the kingdom gradually returns to a regime of monetary tightening, Nicolas Crittenden at Capital Economics says. Though the Gulf state's quarterly budget deficit more than doubled in the third quarter to around $22 billion, Capital Economics expects oil prices--and therefore government revenues--to decrease over the next year as traffic through the Strait of Hormuz returns. As the kingdom tends to fund public services through oil receipts, nonoil sectors are likely to struggle amid a lack of fiscal support, Crittenden writes. "Saudi's nonoil public finances are on difficult ground, even more so now with the escalation in the war in Yemen," he adds. (joseph.wilkins@wsj.com)

0706 GMT - The key asset market question is what the U.S. midterm election results say about the next two years, say Standard Chartered's Steve Englander and Dan Pan in a note. "We emphasize this because big Democratic majorities will not likely produce veto-proof measures, so there may be noise but not much action with economic consequences," the analysts say. One question that will emerge is whether the budget negotiations in December 2026 and debt ceiling negotiations in late 2027 raise threats of government shutdowns and debt default, they say. (emese.bartha@wsj.com)

0655 GMT - The AI investment boom may generate wider economic benefits, HSBC analysts say in a research note. "Recent 3Q GDP data suggest that this could be beginning to happen in Korea and Taiwan, helping to narrow the K-shaped divergence that has emerged within both economies," the bank says. A K-shaped economy is one in which some sectors expand rapidly while others struggle. Domestic demand in Taiwan accelerated in 3Q, supported by stronger capital expenditure and resilient consumption, HSBC says. A similar pattern is emerging in South Korea, where the benefits of AI-related strength appear to be reaching domestic sectors and supporting consumption, they add. (tracy.qu@wsj.com)

0653 GMT - Expectations for the October U.S. jobs report are modest but the headline number deserves some skepticism, MissionSquare CIO Shari Hensrud says in a note. "Three of the last four monthly reports have been revised lower, erasing roughly 150,000 jobs, and payroll growth has averaged only about 50,000 a month over the past three months," she says. October also brought Brent crude near $118 a barrel, while longer-term Treasury yields eased below 5%, she says. "Neither is likely to show up much in this report; their effects on hiring should surface in November and December, and higher energy costs may do more damage than lower borrowing costs can repair." A Wall Street Journal poll of analysts forecasts the addition of 59,000 jobs in October. (emese.bartha@wsj.com)

0652 GMT - A Democratic majority in the House would likely be the most consequential outcome of these midterm elections for the Treasury market, says Jan Groen at Societe Generale. Losing the House and its budgetary powers will deprive the Republican administration of its ability to pursue additional tax cuts or other expansionary fiscal policies, the chief U.S. economist says. "The resulting fiscal policy gridlock would make further fiscal expansion less likely, reducing the risk of further deterioration in the fiscal outlook and therefore limiting upward pressure on longer-term Treasury yields." However, the Democrats' modest majorities, the Senate filibuster, and presidential vetoes remain significant constraints on any push for higher spending by a Democratic Congress, he adds. (emese.bartha@wsj.com)

0650 GMT - Japan's Nikkei Stock Average closed 1.4% lower at 62188.63, its lowest level since July 30, as U.S. Democrats seized control of the House and Senate. Chip and metals stocks led declines, weighed by fears that U.S. data-center projects could slow down. Kioxia Holdings dropped 5.4% and Sumitomo Electric Industries fell 7.2%. Investors are focusing on detailed results for the U.S. midterm elections and their implications for U.S. trade and economic policies. The 10-year Japanese government bond yield rises 3.5 basis points to 2.805%. The dollar is at 158.05 yen, compared with Y158.69 as of Tuesday 5 p.m. Eastern time. (kosaku.narioka@wsj.com; @kosakunarioka)

0640 GMT - Job creation of 65,000 would still be a clear signal that the U.S. labor market remains robust, says Russell Investments' BeiChen Lin in a note ahead of Friday's release of October employment data. His projection is slightly above the 59,000 analysts forecast in The Wall Street Journal's poll. "That would give the Federal Reserve greater opportunity to focus on the inflation aspect of its dual mandate," the senior investment strategist says. Even as inflation has been rising due to the continuing energy shock, wage growth has been relatively modest, Lin says. "Even though job creation today is more broad-based than in 2024, there are still a handful of sectors that are playing a key role." (emese.bartha@wsj.com)

0638 GMT - For investors, the question is no longer simply whether the Federal Reserve will hike interest rates, but how much additional tightening is already reflected in bond prices, says Eric Souders at Payden & Rygel. Markets continue to price additional tightening ahead and that is broadly consistent with Payden & Rygel's expectations. "If anything, somewhat more tightening than we anticipate," the director and portfolio manager says. This backdrop creates an increasingly attractive risk-reward proposition at the front end of the U.S. Treasury curve. "Two- to three-year Treasurys offer yields well above cash and three-month Treasury bills, providing a meaningful cushion against further increases in rates," Souders says. Yields can rise further without necessarily producing a negative total return, he adds. (emese.bartha@wsj.com)

0629 GMT - U.S. midterm results mean less certainty around future stimulus and potentially more uncertainty around regulation, says Saxo Bank chief investment strategist Charu Chanana in a note. A Democratic Congress would constrain Trump's ability to pursue additional fiscal expansion and legislative tax measures, she adds. But it cannot simply reverse the president's entire economic agenda. The immediate reaction reflects three concerns, including reduced scope for further fiscal support, greater oversight of AI and Big Tech, and a potential slowdown in the growth momentum underpinning U.S. exceptionalism, she says. The market may be too quick to assume that a Democratic Congress translates directly into weaker growth, she says. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

0614 GMT - Regulatory certainty is the missing piece for the cryptocurrency industry to unlock widespread adoption, according to Ryan Kirkley, chief executive of Global Settlement Network. He says institutions need clear, enforceable rules around custody, asset ownership, settlement finality and investor protection before committing significant capital. "A shift in congressional control could actually create an opportunity for bipartisan legislation that gives institutions the confidence to invest for decades, rather than operating under guidance that can change with the next administration," he adds. (joseph.wilkins@wsj.com)

(END) Dow Jones Newswires

November 04, 2026 02:45 ET (07:45 GMT)