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

1100 ET - Political risk in Spain after snap elections were called could add to selling in eurozone government-bond markets, prompted by concerns over France's indebtedness and fragmented politics, says Aberdeen's Lizzy Galbraith in a note. "Spain has not been the epicentre of this episode, but its cost of borrowing has started to rise in sympathy with sharper moves in France and Italy." Spain's comparatively favourable debt dynamics leave its bond markets less exposed than France or Italy, however, Galbraith says. Spain's Prime Minister Pedro Sanchez called for elections next month following housing crisis protests. Ten-year Spanish government-bond yields rise 3.9 basis points to 4.123%, according to Tradeweb. They hit 4.219% on Friday, the highest since December 2013. (jessica.fleetham@wsj.com)

1044 ET - The Brazilian real strengthens 4.5% against the dollar and the Ibovespa stock index rises 9% after Sunday's right-wing surprise in the first round of general elections. Conservative Flavio Bolsonaro pulls ahead of leftist incumbent Lula da Silva and both are heading for a runoff on October 25, with the son of former president Jair Bolsonaro carrying momentum. A slew of conservative candidates wins seats across Congress and state governorships. The results fuel hopes among investors of fiscal austerity to rein in widening fiscal deficits, which could make it easier for the central bank to lower interest rates. (paulo.trevisani@wsj.com; @ptrevisani)

1032 ET - Non-oil business conditions strengthened in Saudi Arabia and the U.A.E. in September, with purchasing managers' indexes for both economies at 55.3, Dubai's Emirates NBD Research says. The improvement points to resilient domestic demand despite higher costs and continued regional uncertainty. U.A.E. output rose to its strongest level since February, while Dubai's PMI climbed to 54.5, its highest since January. Emirates NBD says firms are increasingly passing higher input costs to customers, suggesting price pressures are becoming more visible even as demand remains firm. (farhan.rafid@wsj.com)

1029 ET - The Brazilian election is heading into a runoff election for president later this month, and incumbent Luiz Inácio Lula da Silva is now expected to lose to challenger Flávio Bolsonaro, who finished first in the general Brazilian elections held Sunday. U.S. grain futures are getting support from the result, thanks to a stronger Brazilian real in anticipation of a conservative victory in Brazil. "The Brazilian real is expected to gain today, which will harm the profitability of Brazilian farmers," says AgResource in a note. The firm adds that a stronger currency "will slow future Brazilian farmland expansion." CBOT corn is up 0.1%, soybeans rise 0.6%, and wheat climbs 1.7%. (kirk.maltais@wsj.com)

1022 ET - Over the next decade, Baby Boomers and the Silent Generation are expected to release 13.9 million homes, Realtor.com says. That's 34% more than older households did in the last 10 years. But first-time buyers shouldn't expect a windfall; nearly all of those homes are family-sized or larger. The pace climbs throughout the decade, and Boomers overtake the Silent Generation as the main source of inventory around 2029, with the peak likely coming after 2036. 380,000 starter homes are expected to be relinquished by these older cohorts, in part because owners of smaller homes are more likely to have paid off their mortgages and stay put. Today, Boomers and the Silent Generation live in an estimated 36.7 million homes they own. By 2036, Realtor.com expects that to drop to 22.8 million. (chris.wack@wsj.com)

1021 ET - Higher interest rates are weighing on Gulf fixed-income markets without triggering a broader deterioration in investor appetite for regional credit, Kamco Invest says. GCC bond and sukuk, or Islamic bonds, issuance fell 17.5% on quarter to $42.5 billion in the third quarter, while the GCC Credit + High Yield Index lost 3.8%. However, GCC credit spreads ended the quarter at 88 basis points, roughly half the emerging-market average of 170 basis points. Kamco says the selloff reflects higher rates rather than concerns over Gulf credit quality, with sovereign deals from Kuwait, Saudi Arabia and Qatar attracting orders two to five times their issue sizes. (farhan.rafid@wsj.com)

0946 ET - The labor market remains too weak for an extended tightening cycle following Friday's less-than-expected September payroll gain of just 29,000, according to Pantheon Macroeconomics in a note. The economists see the Fed pausing at the October meeting, and think a December move is far from certain. "We expect the FOMC to become increasingly worried about the labor market over the next year. Whether that anxiety deters another hike in December is a close call. But we still expect the Committee to resume easing from mid-2027, as inflation subsides and the labor market disruption from AI becomes too big to ignore," they say. There should be insight on what policymakers were discussing when they raised rates last month when Fed minutes are released on Wednesday. (patrick.sheridan@wsj.com)

0933 ET - Sterling could underperform as the October 28 U.K. budget approaches, Morgan Stanley strategists say in a note. There remains ample capacity for investors to add sterling-negative risk premium ahead of the budget, they say. High U.K. interest rates make it difficult to express sterling-negative views against many currencies but investors could bet on sterling falling against the dollar "given an increasingly-consensus market view for a higher dollar and the capacity for sterling to cheapen further as more risk premium is added." Sterling falls 0.2% to $1.3212. (renae.dyer@wsj.com)

0901 ET - French government-bond yields turn lower as buying resumes given yields are so close to multiyear highs. However, French bonds will likely remain volatile as France's fiscal credibility faces pressure from missed deficit targets, political gridlock and rising interest costs, eToro strategist Lale Akoner says in a note. The bonds look cheap but this doesn't mean they are attractive, she says. Potential selling by Japanese institutions, who are major foreign holders of French government bonds, could "add to market volatility," she says. The key will be whether bond-market selling spreads beyond France to other European countries, she says. French 10-year yields fall 3.8 basis points to 4.818%, having hit 4.993% on Friday, their highest since 2002, Tradeweb data show. (renae.dyer@wsj.com)

0900 ET - Treasury yields are little changed from the high levels they ended at last week. The U.S.-Iran standoff keeps Brent crude above $100, while odds of a Fed hold this month rise to 81% from 78% Friday. No major data points are on tap today. The Treasury will auction three-year notes tomorrow, followed by a 10-year auction Wednesday and 30-year on Thursday. Fed minutes are due Wednesday. The 10-year yield is at 5.276% and the two-year at 4.821%. (paulo.trevisani@wsj.com; @ptrevisani)

0900 ET - The recent selloff in French government bonds due to fiscal worries makes U.K. assets look comparatively safe, supporting sterling versus the euro, Ebury's Enrique Diaz-Alvarez says in a note. "The pound also continues to be well supported by resilient domestic data, with last week's revised GDP figures showing that the U.K. economy grew at a faster pace than initially anticipated in the second quarter." The October U.K. budget is a key risk for sterling and U.K. government bonds but French developments dominate, he says. The euro falls 0.3% to 0.8469 pounds after earlier reaching an 11-week low of 0.8456, according to LSEG. (renae.dyer@wsj.com)

0848 ET - The cost of insuring high-yield euro credit against default rises to a six-month high amid concerns about France's fiscal situation and after Spain announced snap elections, adding a layer of uncertainty to the eurozone outlook. French bond yields and their spreads against German peers soared to multiyear highs last week after the French government presented a budget proposal. Markets calm a little on Monday but French and Spanish government-bond yields remain elevated. "Europe's political and fiscal backdrop is becoming a more prominent market concern," Tickmill's Patrick Munnelly says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps rises 4 basis points to 305bps, S&P Global Market Intelligence data show.