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

0702 GMT - Bitcoin falls as the dollar rises on U.S. interest-rate rise expectations and as Middle East tensions persist. The U.S. ISM services purchasing managers' index fell to 54.9 in September from 55.4 in August but the prices paid index rose to 74 from 72.6, supporting the case for further rate hikes. That shows U.S. activity remains resilient even as it cools but persistent cost pressures mean inflation risks haven't disappeared, Zaye Capital Markets analyst Naeem Aslam says in a note. "With no major U.S. economic release scheduled today, we expect bitcoin to remain particularly sensitive to Treasury yields, the dollar, exchange traded fund flows and any fresh geopolitical developments." Bitcoin drops 0.6% to $85,297, LSEG data show. (renae.dyer@wsj.com)

0654 GMT - Nordic markets are seen opening higher, with IG calling the OMXS30 up 0.7% at around 3280. The unusual recent trend of both rising bond yields and stock markets continued Monday, SEB economist Pia Fromlet writes. Technology stocks drove the stock-market rise, she says. Chinese markets are closed, but stock markets in Japan and Hong Kong are rising. Futures point to positive openings in Europe and the U.S. Tuesday, the French budget for 2027 will be formally submitted. "The hope is that the budget will show that France is on the right track and thus prevent the already elevated interest rate differential between French and German ten-year government bonds from spiraling further." OMXS30 closed at 3257.59, OMXN40 at 2595.90 and OBX at 1976.67. (dominic.chopping@wsj.com)

0649 GMT - Japan's Nikkei Stock Average rose 1.1% to 70683.98, closing above the 70000 threshold for the first time since July 1, despite continued uncertainty over the Iran conflict. Electronics and metals stocks led gains, driven by expectations for rising artificial intelligence-related demand. Advantest gained 3.8% and Fujikura climbed 5.2%. The dollar was at 158.21 yen, compared with Y157.91 as of Monday 5 p.m. Eastern time. Investors were focused on developments in the Middle East and crude oil prices. The 10-year Japanese government bond yield rose 2 basis points to 3.105%. (kosaku.narioka@wsj.com; @kosakunarioka)

0639 GMT - The dollar remains firm after reaching its highest level since April 2025 against a basket of currencies Monday, supported by U.S. interest-rate rise expectations and French debt concerns. While expectations for the Federal Reserve to raise rates later this month have been trimmed in recent sessions, markets are fully pricing a 25 basis-points rate increase by December and more than three moves next year, LSEG data show. Meanwhile, French fiscal worries have weighed on the euro and lifted the dollar as a safe haven. The DXY dollar index rises 0.1% to 102.259 after reaching as high as 102.535 Monday. (renae.dyer@wsj.com)

0639 GMT - Asia's AI exports are showing signs of cooling, HSBC economists say in a research note. Asia's seasonally adjusted shipments of electronics have pulled back notably in recent months, including those from Taiwan, a key provider of chips, the economists say. Exports from South Korea are still rising, in part reflecting solid prices for advanced memory chips, while prices for other electronics along the AI hardware supply chain have started to cool, they note. The relentless rise in AI hardware, which has driven the gain in Asian export values, is easing too, they say. The slowdown may not be a surprise, they reckon, as after a sharp run-up in spending by U.S. hyperscalers, their capex growth is bound to slow.(sherry.qin@wsj.com)

0638 GMT - Economies in North Asia are facing a shift in constraints to supply from demand, HSBC economists say in a note. Supply-side pressures are intensifying, with component shortages, longer delivery times and elevated oil prices constraining production, say Frederic Neumann and Ines Lam. In Taiwan, South Korea and Japan, firms increased purchasing activity to support production, but supplier performance deteriorated, the economists say, based on September PMI data. Taiwan recorded one of the fastest deteriorations in vendor performance since early 2022, while Japan saw supplier delays worsen at one of the steepest rates of the past four years. South Korea is using finished products to meet orders, Taiwan is struggling to secure materials for future production, and Japan is building finished-goods stocks while shipments remain delayed, they note. (monica.gupta@wsj.com)

0637 GMT - A 25bp rate hike from the RBI Wednesday is virtually a given, HSBC economists say. The bigger question is how to deliver a "credible hike" as markets are differentiating between credible and non-credible hikers. The RBI would thus need to convey more tightening is coming if needed to meet targets like 4% inflation. A 50bp hike could be alarming "especially since the previous policy had been perceived as dovish, and a sharp change may be unsettling." A 25bp hike accompanied by a cash reserve ratio move that takes out liquidity immediately--so it doesn't become inflationary--might look like a policy flip-flop. If aptly explained that RBI will remain data-dependent, a change in stance from "neutral" to something like "withdrawal of accommodation" could provide some cover. All told, the RBI's mission is enhancing credibility.(fabiana.negrinochoa@wsj.com)By Emese Bartha Long-dated U.S. Treasury yields hovered close to multidecade-high levels in Asian trade on Tuesday, as investors remained concerned over fiscal, inflation and debt sustainability risks.

The 10-year Treasury yield was down 0.8 basis points at 5.301%, while the 30-year yield was steady at 5.663%, according to Tradeweb. They reached levels of 5.349% and 5.703% on Monday, respectively, levels unseen since 2002.

Attention will turn to the Treasury's $58 billion auction of three-year notes on Tuesday.

With levels attractively high for buyers at the short end of the curve, and with odds of a Federal Reserve rate hike in October declining, particularly after Friday's weak U.S. jobs data, the auction is expected to go smoothly.

"Focus is likely to move to the three-year auction tonight from the U.S. Treasury," said Jens Peter Sorensen, chief analyst at Danske Bank. "The outright level of close to 5% is looking attractive despite higher-than-expected ISM service prices released yesterday," he said in a note.