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

2044 ET - There are no signs yet that aggressive interest rate cuts by the Reserve Bank of New Zealand since mid-2024 are gaining traction and lifting the economy, says Ben Jarman, chief economist at JP Morgan. To be sure, recent GDP revisions show a more worrying economic trajectory, he adds. The data have yet to turn up meaningfully because policy traction is still being blunted by earlier OCR hikes, he adds. This has slowed the lowering of new mortgage rates, and any improvement in disposable incomes, Jarman says. A number of households will still be rolling their mortgages into higher rates than previous, he adds. (james.glynn@wsj.com; @JamesGlynnWSJ)

2046 ET - JGBs fall in price terms during the morning Tokyo session. Data released earlier show Japan's real wages rose 0.6% in December from a year earlier, marking a second straight month of increases and adding to the case for another BOJ rate hike. The sharp rise in the BOJ's core CPI inflation forecasts in the January outlook report, together with Gov. Ueda's recent comment that there's "still a significant distance to the neutral rate of interest," has sparked worries over an acceleration of rate hikes and an increase in the terminal rate for this cycle, Mitsubishi UFJ Morgan Stanley Securities' fixed income strategists say in a recent report. The JGB 10-year yield is 1.5 bps higher at 1.290%. (ronnie.harui@wsj.com)

2041 ET - New Zealand's unemployment in 4Q 2024 rose to a four-year high of 5.1%. While this was in line with the Reserve Bank of New Zealand's forecasts, money markets should expect a cut in the official cash rate later this month of "at least" 50 basis points, says Kieran Davies, chief macro strategist at Coolabah Capital. The unemployment rate almost matches the peak of 5.2% reached during the short Covid recession in 2020, Davies notes. (james.glynn@wsj.com; @JamesGlynnWSJ)

2032 ET - From a policy perspective, data showing New Zealand's unemployment rates at a 4-year high of 5.1% reaffirm the view that the Reserve Bank of New Zealand will continue to lower rates sequentially over 1H, including another 50-basis-point cut at a policy meeting later this month, says Andrew Boak, chief economist at Goldman Sachs. Boak continues to expect the RBNZ to slow the pace of cuts to 25 basis points per meeting, starting in April, ultimately reaching a terminal official cash rate of 3.0% in July. Still, the risks are skewed to faster and deeper cuts if the recent improvement in high-frequency surveys does not translate into some improvement in the economy, he adds. (james.glynn@wsj.com; @JamesGlynnWSJ)

1958 ET - Trump's 10% tariff hike on China will likely cause faster industry consolidation among its industrial companies, Citi Research analysts led by Eric Lau say. While major exporters like Techtronic and Shenzhou have diversified production into Asean to avoid tariffs, smaller Chinese companies are unable to do so given difficulty in obtaining bank loans and lack of management resources, they say in a note. The tariff hike could cause them significant distress and spike the unemployment rate in China as these firms constitute about 79% of the total workforce, they add. That could lead China to roll out more stimulus to counter the economic impact. (fabiana.negrinochoa@wsj.com)

1957 ET - U.S.-China trade tensions have some investors concerned about potentially higher tariffs on Asean. While that can't be ruled out, Citi Research analysts led by Eric Lau think tariffs are unlikely to be on par with those levied at Mexico or China as Asean is an attractive region to help dilute CPI inflation for U.S. imported goods. Many major China exporters have diversified production into Asean to avoid tariffs but focus on labor-intensive, non-tech industries such as apparel and footwear that aren't targeted for reshoring into the U.S., they say. Mexico meanwhile has attracted automotive supply-chain industries as the U.S. government seems inclined to emphasize auto manufacturing reshoring, they add. "The tariff hike scenario in Mexico may not necessarily apply to Asean, in our view."(fabiana.negrinochoa@wsj.com)

1937 ET - South Korea's benchmark Kospi rises 0.9% to 2503.94 in early trade, as battery, semiconductor and auto stocks advance. Foreign and retail investors are net buyers amid easing fears over U.S. tariffs. Battery makers LG Energy Solution and Samsung SDI rise 2.0% and 2.9%, respectively, recovering from recent losses. Memory-chip maker SK Hynix gains 2.6%. Carmaker Kia is up 1.1%. Meanwhile, LG CNS, an IT service affiliate of LG Group, is down 2.9% on its stock exchange debut. USD/KRW is 0.5% lower at 1,454.90, compared with the prior session's Seoul onshore trading close. South Korea's 10-year government bond yield is up 0.9 bp at 2.844%. (kwanwoo.jun@wsj.com)

1930 ET - The economy remains on solid footing but its health is uneven across sectors, Fed Vice Chair Philip Jefferson said Tuesday. In a lecture at Pennsylvania's Lafayette College, Jefferson notes strength in household spending, retail sales and activity in the services sector. "The consumer spending data we have received recently have surprised me to the upside," Jefferson said, per his published remarks. On the other hand, some sectors have been notably weak. Residential investment has been flattish over the past three quarters, he notes, and production from the domestic manufacturing sector was about flat last year too. "Much of the equipment investment that did take place came from imports," Jefferson says. (matt.grossman@wsj.com; @mattgrossman)

1913 ET - Japanese stocks are higher in early trade as fears about U.S. tariffs subside for now. Electronics stocks are leading the gains. Renesas Electronics is up 3.4% and Hitachi Ltd. is 2.9% higher. USD/JPY is at 154.31, compared with 155.37 as of Tuesday's Tokyo stock market close. Investors are closely watching U.S. trade talks as well as domestic earnings. Toyota Motor is scheduled to report its quarterly results later in the day. The Nikkei Stock Average is up 0.7% at 39070.87. (kosaku.narioka@wsj.com; @kosakunarioka)

1850 ET - Japanese stocks may rise as fears about U.S. tariffs subside for now. Nikkei futures are up 0.4% at 38975 on the SGX. USD/JPY is at 154.17, compared with 155.37 as of Tuesday's Tokyo stock market close. Investors are focusing on U.S. trade talks as well as domestic earnings. Toyota Motor is set to announce its quarterly results later in the day. The Nikkei Stock Average rose 0.7% to 38798.37 on Tuesday. (kosaku.narioka@wsj.com; @kosakunarioka)

1825 ET - BlackRock, the world's largest asset manager, last year announced a series of acquisitions of private market-focused firms that "lay a foundation for an increased integration of public and private" assets, Apollo's CEO Marc Rowan says during an earnings call. "I continue to believe this convergence of public and private will be a very important source of demand for private assets," Rowan says. BlackRock last year acquired infrastructure-focused Global Infrastructure Partners and agreed to buy credit specialist HPS Investment Partners as well as Preqin, a provider of private-market research. "We envision that traditional asset managers will evolve their businesses to include products that are public and private," Rowan adds. "Our industry and our firm will be a supplier of products to [them]." (luis.garcia@wsj.com; @lhvgarcia)

1551 ET - Treasury yields lose steam as the trade war cools down a little and both factory orders and job openings in the U.S. fall. Economists surveyed by The Wall Street Journal expect the ADP private-sector jobs report tomorrow to show an increase to 150,000 from December's 122,000, while December trade deficit is forecast to widen to $96.8 billion from $78.19 billion. Jobless claims on Thursday are expected to accelerate and Friday's payrolls increases are expected to slow. Analysts show increasing concerns over stickier inflation and weaker growth potentially resulting from trade wars. The 10-year yield loses 0.031 percentage point to 4.511% and the two-year falls 0.051 p.p. to 4.213%. (paulo.trevisani@wsj.com; @ptrevisani)

(END) Dow Jones Newswires

February 04, 2025 20:47 ET (01:47 GMT)

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