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

0901 ET - A global bonds selloff continues, pushing Treasury yields higher, as the war in Iran muddles the economic outlook. Investors worry about ballooning government debt and sticky inflation. Oil keeps rising, with WTI up 2.5% to $87.92. July JOLTS report, at 10 a.m. ET, kicks off a string of U.S. labor data likely to move markets this week. Odds of a Fed hike in September tick higher to 66% from 65% yesterday. The two-year Treasury yield, which is more sensitive to Fed policy, touches 4.369%, which would be its highest settle since January 2025. The 10-year goes as high as 4.797%, also the highest in 19 months. (paulo.trevisani@wsj.com; @ptrevisani)

0856 ET - The Bank of Canada might try to ease immediate concerns over the economic damage from escalating US-Canada trade tensions, says Ali Jaffery, chief economist at KPMG Canada. For starters, Canada tariffs on US imports, which kick in next week, mostly target intermediate goods, or inputs used to make final products, as opposed to consumer goods. Combined with the existing slack in the economy, the trade developments should not ignite immediate inflationary pressure, Jaffery tells WSJ. Canada faces two economic shocks with uneven impacts, he adds. Trade tensions will pose a drag on investment and hiring, while the Mideast conflict is keeping energy prices elevated but also lifting income in resource-rich parts of Canada. The BOC "has a very strong reason to be in wait-and-see" mode, Jaffery says. (paul.vieira@wsj.com; @paulvieira)

0850 ET - The escalation in US-Canada trade tensions will weigh heavily on Bank of Canada officials when they release the latest rate-policy decision on Wednesday, says Dominique Lapointe, Manulife Wealth & Asset Management's senior director of macro strategy. Yet, trade won't drive BOC decision making because the crossborder trade backdrop could still change, Lapointe tells WSJ. Washington has imposed 50% tariffs on certain goods, Canada will impose retaliatory duties next week, and President Trump has threatened 50% levies on Canada autos and auto parts on Jan. 1. The BOC "cannot know what its next move will be in the current context. It will continue to focus on the data at hand and wait for further clarity before trade tensions impact their guidance," Lapointe says. (paul.vieira@wsj.com; @paulvieira)

0847 ET - Canada's economy looks to be on more solid footing, and that will give the Bank of Canada little reason to panic about escalating US-Canada trade tensions, says Tu Nguyen, economist at RSM Canada. "It is crucial to separate the data from emotions," she tells WSJ, noting both spending and the household savings rate climbed in 2Q. The 50% tariffs the US has imposed on certain Canadian goods, totaling 5% of all US-bound exports, will be "painful in specific sectors, but manageable from the central bank's standpoint." Nguyen anticipates a BOC hike in 1Q, although acknowledging the call is subject to change due to US-Canada trade ties and energy prices. (paul.vieira@wsj.com; @paulvieira)

0844 ET - Despite heated remarks from US and Canadian officials on trade, the Bank of Canada is likely to take a patient approach on rates and rely on incoming data before changing policy, says Charles St-Arnaud, chief economist at Servus Credit Union. The main impact from the escalating trade row is that it increases the uncertainty about the outlook, he adds. He has a BOC rate hike penciled in for 2Q of 2027. (paul.vieira@wsj.com; @paulvieira)

0841 ET - The Bank of Canada's rate-policy decision and statement Wednesday might have a dovish tone due to crossborder trade tensions, says TD Securities economist Robert Both. "The BOC has been vocal about trade tensions and tariffs as a downside risk to its outlook," Both tells WSJ. New US tariffs of 50% on certain Canadian goods, and the threat of higher auto duties, are likely to add to uncertainty, Both says. Both adds the BOC could still be in a position to raise rates in 1Q should trade tensions cool. (paul.vieira@wsj.com; @paulvieira)

0838 ET - The bar for another rate cut from the Bank of Canada remains high despite the recent escalation in US-Canada trade tensions, says Carl Gomez, chief economist at Centurion Asset Management in Toronto. He tells WSJ that, notwithstanding crossborder trade concerns, financial markets remain focused on the risk of inflation accelerating in Canada. The rise in bond yields suggests "the Bank of Canada may be behind the curve on tightening rates," Gomez says. The yield on the 2-year Canada government bond is above 3%, or 75-percentage-points above the BOC policy rate of 2.25%. Gomez says the trade conflict likely delays the timing of BOC rate increases, to 2H of next year. (paul.vieira@wsj.com; @paulvieira)

0835 ET - National Bank of Canada economist Ethan Currie says that when the Bank of Canada meets Wednesday to discuss interest rates, it will argue its policy rate, at 2.25%, remains appropriate amid uncertainty about the US-Iran conflict and escalating trade tensions between Ottawa and Washington. Currie tells WSJ he expects the BOC to highlight both the upside risks to inflation and the downside risks to growth stemming from the trade conflict. "Of course the downside risks have increased, and the BOC has said it may ease in response to tariffs-they'll continue to flag that as a possibility," Currie says. National Bank's forecast envisages BOC rate hikes starting in 1H of 2027, although Currie says that hinges on recent economic momentum holding steady and an easing of trade tensions. (paul.vieira@wsj.com; @paulvieira)

0815 ET - The dollar's rise has been relatively muted in response to Federal Reserve Chairman Kevin Warsh's speech on Friday, where he warned of a potential need to raise interest rates if inflation didn't return back down to target, says MUFG's Derek Halpenny. This makes sense given investor's caution ahead of U.S. jobs data on Friday and inflation figures next week, where weak numbers could make a rate hike on Sept. 16 look less likely, he says. The Fed's September decision "remains a close call" ahead of these key data. "With an elevated degree of uncertainty given the busy month of central bank meetings, the dollar buying has been curtailed," Halpenny says. The DXY dollar index rises 0.2% to 99.633. (jessica.fleetham@wsj.com)

0754 ET - The U.S. dollar is rising, benefiting from higher Treasury yields. "It [the dollar] often does better when U.S. rates are rising unlike many of the other major currencies," Bannockburn Capital Markets' Marc Chandler says in a note. Adding to the dollar's gains is the escalation of the Middle East situation between the U.S. and Iran, which drives oil prices higher. The dollar benefits from this both because the U.S. is an oil exporter and because of the currency's safe-haven role. The DXY dollar index rises 0.2% to 99.590. The 10-year U.S. Treasury yield earlier hit 4.792%, its highest since January 2025, according to LSEG data.(emese.bartha@wsj.com)

0732 ET - European stocks extend losses through the European morning after eurozone inflation rose for a third-straight month in August, bolstering investor expectations of an ECB rate hike next week. The Europe-wide Stoxx 600 trades down 0.7% after opening flat. Losses are most sharp among energy-intensive industries, as Brent crude oil and benchmark gas contracts each rise by around 2%. A basket of European auto stocks falls 2.1%, while an aerospace and defense gauge is down 2.5%. London's FTSE 100 trades 0.8% lower as metals miners slide, while the CAC 40 trades down 0.4% after initially gaining Tuesday. The industrial-heavy DAX falls 1.1%, dragged by a 3.2% decline for Rheinmetall. ASML is flat after opening higher, taking steam out of the Dutch AEX, which falls 0.4%. (josephmichael.stonor@wsj.com)

0707 ET - The U.S. dollar's gains accelerate moderately in European midday as Treasury yields rise, with the currency reacting positively to Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole symposium last Friday, Trade Nation's David Morrison says in a note. "Warsh left no one in any doubt that the U.S. central bank's focus was on getting inflation back to its 2% target, as measured by core PCE," the senior market analyst says. The latest print of core PCE came in at 3.3%, so "the Fed has quite a big job on its hands," Morrison says. The DXY dollar index rises 0.2% to 99.606.