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

0945 ET - The U.S. Federal Reserve is unlikely to increase interest rates in October after weak inflation data and jobs data released this week, ABN Amro's Rogier Quaedvlieg says. Data Friday showed the U.S. added 29,000 nonfarm payrolls in September, below the consensus forecast of 84,000 jobs by economists in a WSJ poll. The personal consumption expenditures price index data for August released this week also came in weaker than expected. The data removes the pressure on the Fed to raise interest rates in October, Quaedvlieg says. Markets expect a 20% chance of a Fed rate hike in October, down from an over 70% possibility priced in at the start of this week, LSEG data show. (miriam.mukuru@wsj.com)

0942 ET - September's weaker-than-expected jobs report has decreased expectations that the Fed will hike in October, but that doesn't mean rate hikes are off the table completely for the rest of the year. This week, Fed Vice Chair Philip Jefferson and New York Fed president John Williams suggested policymakers could take their time before deciding to raise interest rates again. However, on Thursday, Fed's Lorie Logan said policy needs to tighten further. "We think the upside risks to inflation are still a bigger concern for the Federal Reserve and expect they will raise rates at the end of the month," a note from Oxford Economics says. (jessica.coacci@wsj.com)

0928 ET - The September jobs report will be viewed as good news for the credit markets, Catalyst Funds' Larry Holzenthaler says in a note. The weak payrolls number can provide a slightly more balanced sentiment around interest rates by dropping the urgency for another Fed hike while keeping inflation as the central bank's primary concern, he says. A slower rate of rate hikes will ease anxieties in the credit markets, which have gotten angsty recently with the sharp rise in yields, Holzenthaler says. Still, the portfolio manager believes that lower-duration, more credit-sensitive assets continue to offer a more attractive risk-return for investors than traditional fixed income. (dean.seal@wsj.com)

0922 ET - The September employment report has further undermined the chances of another Fed hike later this month after the tally of jobs added fell far short of expectations, BMO analysts say in a research note. Private companies aren't hiring as much as expected and past job numbers were downgraded, the analysts say. Job growth remains sluggish and wage growth slowed down, they say. It's a disappointing update on the labor market's conditions that has raised the bar for this month's inflation reports to justify a rate hike at the Fed's October meeting, the analysts say. Odds of an October rate increase are at 18%, according to the CME FedWatch tool. (dean.seal@wsj.com)

0914 ET - Yields on U.K. 2-year government bonds fall to the lowest level in three weeks after weaker-than-expected U.S. jobs data lowered the prospects of the U.S. Federal Reserve raising interest rates in October. U.S. non-farm payrolls increased by 29,000 in September, considerably weaker than the 84,000 consensus forecast by economists in a WSJ survey. Following the data, markets only price in an 18% chance of the Fed increasing rates in October, down from 24% chance prior to the data release, LSEG data show. U.K. 2-year gilt yields hit a three-week low of 4.688%, before trimming the fall to last trade at 4.738%, LSEG data show. Ten-year gilt yields fall to a 9-day low of 5.2897%. (miriam.mukuru@wsj.com)

0847 ET - Lower-than-expected U.S. employment numbers deepen an overnight decline in Treasury yields from lofty levels. September payrolls come at 29,000, lower than WSJ consensus of 84,000. July and August numbers are revised down by a total of 60,000. The unemployment rate ticks higher to 4.2%, versus estimates that it would stay at 4.1%. The data bolsters forecasts of a more moderate pace of interest rate increases by the Fed. Oil prices also cooperate, falling over 3%. The WSJ Dollar Index falls 0.3%. The 10-year Treasury yield is at 5.178%, down from 5.239% before the payrolls. The two-year slips to 4.718% from 4.773%. U.S. stock indexes extend early gains, with S&P 500 futures up 61.5 points. (paulo.trevisani@wsj.com; @ptrevisani)

0833 ET - The widening gap between yields in Treasurys and European government bonds is weighing on the euro versus the dollar despite resilient eurozone economic indicators, XS.com's Simon-Peter Massabni says in a note. "The divergence between strong eurozone fundamentals and a weak single currency highlight how yield differentials currently dominate price action," he says. Sticky energy prices are keep Treasury yields stubbornly high, reinforcing the dollar's yield advantage relative to European assets, he says. The euro rises 0.1% to $1.1248, having reached a 16-month low of $1.1214 Thursday, LSEG data show. The spread between the 10-year Treasury-German yield reaches the widest since June 2025 on Friday. (renae.dyer@wsj.com)

0827 ET - Any turning point in the selloff of French government bonds would happen only when there is a credible commitment to reduce the deficit over several years to put debt on a sustainable path, Capital Economics' Andrew Kenningham says. "While yields may fall a bit in the coming weeks, we remain pessimistic over the longer term because France's debt-to-GDP ratio looks set to continue rising for the foreseeable future," he says in a note. The draft budget unveiled Thursday, which could still be watered down, would reduce the deficit to 5.0% next year, not enough to stabilize the debt ratio. It looks increasingly likely a bigger fiscal crisis will be needed to prompt France's politicians to agree on a sustained program of fiscal consolidation, Kenningham says. (edward.frankl@wsj.com)

0825 ET - While the jump in eurozone inflation is still mainly driven by energy prices, broader inflationary pressures mount with energy prices set to stay elevated, ING's Bert Colijn says in a note. Inflation was 3.8% in September, the highest since 2023. Despite oil prices remaining somewhat below peaks in 2022 and this spring, Euro 95 petrol prices have reached an all-time high, weighing significantly on the inflation basket, he says. Now with food inflation ticking higher to 1.4% from 1.1% in August, and core inflation rising to 2.5% from 2.4%, there seems to signs of increased pass-through to other inflation categories, albeit this is very preliminary, Colijn says. The ECB still has work to do, he adds. (edward.frankl@wsj.com)

0825 ET - Despite rising supplies from the Middle East, crude-oil prices are still pushing inflation higher, KfW Research economist Stephanie Schoenwald says. Eurozone inflation rose to 3.8% from 3.2% in August, driven by the protracted energy-price shock. Reduced processing capacities due to the war have exacerbated shortages of refined products, particularly diesel, she says. Alongside households' medium-term inflation expectations picking up again, this strengthens the case for a further European Central Bank interest-rate hike, Schoenwald notes. But the situation is less serious than the inflation spike of 2022, with core inflation remarkably stable. "This gives the ECB the leeway to act prudently. A moderately restrictive key interest rate is likely to remain the appropriate response for the time being," she says. (edward.frankl@wsj.com)

0810 ET - Increased volatility in global government bond yields has triggered a broader liquidation of foreign exchange carry positions, hitting emerging market currencies, MUFG Bank's Derek Halpenny says in a note. Carry trades, which involve borrowing in low-yielding currencies to invest in higher-yielding currencies, tend to benefit from a low-volatility environment. "There has been an increasing risk of losses suffered in fixed income spreading as investors start to pare profitable positions to offset fixed income losses," Halpenny says. Volatility in emerging-market currencies has surged close to highs seen following the onset of the Iran war, particularly weakening the Mexican peso, he says. The dollar rises 0.3% to 18.3268 pesos, having reached a 10-month high of 18.4330 Thursday, according to LSEG. (renae.dyer@wsj.com)

0742 ET - The euro falls to a 10-week low against sterling as the spread between French and German government bond yields widened further. Sterling is also lifted by U.K. Prime Minister Andy Burnham promising to recast relations with the EU at a summit in November. Adding further support to sterling, an unexpected upward revision to U.K. second quarter economic growth earlier this week bolstered expectations for the Bank of England to raise interest rates. The euro falls to as low as 0.8501 pounds. The 10-year French-German yield gap rises to its highest level since November 2011 at 152.34 basis points, according to LSEG.