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

0600 GMT - Germany is set to lead an anticipated rise in gross government bond issuance in the eurozone in 2027, Morgan Stanley strategists say in a note. They forecast Germany's gross bond supply to rise by 15% to 400 billion euros in 2027 from 348 billion euros in 2026. With that, Germany is set to become the largest issuer in the eurozone, overtaking France and Italy. Morgan Stanley expects a 4% increase in gross bond issuance by the eurozone's 11 largest issuers to 1.533 trillion euros in 2027. (emese.bartha@wsj.com)

0552 GMT - Jefferies has stayed away from long-end bonds since July, "as we did not see an easy way out of the U.S.-Iran war," global economist Mohit Kumar says in a note. Positioning is, however, the one factor that is supportive of rates, as it is at stretched levels, according to Jefferies' indicators. "If we do get a weaker [U.S.] CPI print, we could see a knee-jerk short covering of positions going into the Federal Reserve meeting," he says. August CPI data are due on Friday. Analysts in The Wall Street Journal's poll expect the headline index at 3.4%, unchanged from July. (emese.bartha@wsj.com)

0543 GMT - The rise in intra-eurozone government yield spreads over German Bunds--a consequence of poor fiscal positions in, for example, in France, Italy and Belgium--is justified by fundamentals, Capital Economics' Thomas Mathews says in a note. "That puts those countries' bonds in a tough spot," the head of markets, Asia Pacific, says. "We think that ongoing heavy [bond] issuance and upcoming elections will mean spreads in France and Italy, at least, could widen further over time," he says. (emese.bartha@wsj.com)

0540 GMT - The intriguing question ahead of the European Central Bank's policy decision on Thursday is whether the central bankers will add fuel to the fire or dampen speculation about rate hikes somewhat, LBBW's Elmar Voelker says in a note. Within the new growth and inflation forecasts "in our view, the focus here is on the expected inflation rate for 2028, because the medium-term inflation outlook is of paramount importance for monetary policy," the senior fixed income analyst says. So far, the ECB has projected an inflation rate of exactly 2% for 2028. If the projection were to be revised upward, "we believe this would be an indirect indication that monetary policymakers are leaning towards another hike toward the end of the year." (emese.bartha@wsj.com)

0530 GMT - Gross government bond issuance by the eurozone's largest 11 issuers is expected to rise 4% to 1.533 trillion euros in 2027 from 1.472 trillion euros in 2026, Morgan Stanley strategists estimate in a note. "We expect the euro area fiscal stance to remain broadly unchanged in 2027, with the aggregate deficit at 3.5% of GDP (versus 3.4% in 2026)," they say. France and Belgium are set to run the largest deficits, at 5.2% and 5.1% of GDP, respectively. Supply pressure is increasingly concentrated in core and semi-core markets, led by Germany's higher borrowing needs, while Italy sees the largest decline in net supply among the big four issuers [Germany, Italy, France, Spain], they say. (emese.bartha@wsj.com)

0527 GMT - Going into 2027, eurozone bond curves are expected to resume steepening, encouraging debt management offices to continue gradually reducing weighted average maturity, Morgan Stanley strategists say in a note. "Nevertheless, we still see scope for new 30-year syndications across the Big 4 [Germany, Italy, France, Spain], with the exception of Spain," they say. Among smaller issuers, Morgan Stanley strategists expect potential 30-year deals from the Netherlands and Finland, and possibly Portugal. (emese.bartha@wsj.com)

0520 GMT - The recent rise in the 10-year U.S. Treasury yield has been driven by the real term premium, rather than inflation expectations or rate expectations, Variant Perception says in a note. "This can be viewed as a 'normalization' where the real term premium is back in its post-GFC [Global Financial Crisis] range." Variant's fair value for the 10-year yield is in the range of 4.10% to 4.35%. "The gap is wide, but not unprecedented, we saw similar gaps close in 2023 and 2024," it says. The 10-year Tresaury yield closed at 4.782% on Friday.(emese.bartha@wsj.com)

0518 GMT - Increasing debt supply in Europe to fund greater defense and infrastructure spending, inordinately high corporate debt issuance by hyper-scalers to finance AI investments, and rising fiscal spending in Japan, will likely increase term premiums globally, Said Haidar, Founder and CIO of Haidar Capital Management, says in a note.This will ultimately push-up longer-end U.S. Treasury yields as well in order to attract buyers, he says. If the U.S. opts for financial repression to artificially hold down long-end yields, the likely outcome is U.S. dollar debasement-as illustrated by recent moves in FX markets as well as strength in gold and other commodities, he says. (emese.bartha@wsj.com)

0506 GMT - Macquarie Group brings forward its expectation of a Federal Reserve interest-rate hike, now expecting it this month instead of December, following stronger-than-expected labor market data, says David Doyle, head of economics. The strong report, together with hawkish remarks on inflation from Chairman Kevin Warsh, has led to a shift in market expectations for Fed hikes, he says. Macquarie continues to anticipate a second 25-basis-point hike in the first quarter of 2027, Doyle says. August CPI data on Friday is likely to be a significant input into the September policy decision. "If this is strong, it will likely solidify a hike this month. In contrast, soft data could lead the FOMC to defer a hike to October or December."