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

0523 GMT - The U.S. two- to 10-year Treasury yield curve has scope to steepen further in the next three months, potentially to 70 basis points, DZ Bank analysts say in a note. "While we expect the long-end to continue trending sideways, we see room for short-end yields to go lower," they say. The two- to 10-year curve has significantly steepened over the past two weeks as investors have scaled back their expectations of Federal Reserve rate hikes, the analysts say. The steepening was driven mainly by two-year yields, which have fallen, while 10-year yields remained mostly rangebound. The spread is currently around 55 basis points, with the two-year Treasury yield trading at 4.193% and the 10-year yield trading at 4.741%, according to Tradeweb. (emese.bartha@wsj.com)

0517 GMT - JGB yields are likely to keep facing upward pressure unless supply-demand conditions and persistent inflation fears improve, says Sony Financial Group economist Takayuki Miyajima. Expectations of foreign exchange intervention and the government's potential tolerance for Bank of Japan interest-rate hikes could ease inflation risks. However, "in the short term, geopolitical friction in the Middle East and uncertainty surrounding monetary and fiscal policies are weighing on market sentiment," Miyajima says. The 10-year JGB yield last stood at 2.930% after hitting a fresh 30-year high of 2.945% earlier in the session. (megumi.fujikawa@wsj.com)

0512 GMT - The U.S. Treasury's 30-year bond auction last week, which delivered the highest yield since 2001, and the data surrounding it make it worth going beyond the headline, says Barclays' Anshul Pradhan in a note. July payrolls, CPI and retail sales came in soft, and all three data points should have pulled yields lower, the strategist says. "While not unique to the U.S., long-end yields have risen globally to varying degrees, we think three factors are at play: the budget deficit outlook, AI-related corporate issuance, and the changing Treasury buyer base," he says. (emese.bartha@wsj.com)

0509 GMT - The scaling back of Federal Reserve rate hike expectations feels "somewhat overdone" given that details of the data were more mixed than headline numbers suggested, say Deutsche Bank strategists in a note. Market pricing of Fed rate hikes for this year has been reduced to just under one hike priced through December. Additionally, there is another round of inflation and employment data ahead of the next FOMC meeting, they say. "Long-end yields remain elevated, with term premia having moved higher and the curve steepening materially," the strategists say. "In the front end, despite heavy bill issuance in recent weeks, funding markets have remained remarkably calm."