0826 ET - U.K. government bonds, or gilts, are likely to experience improved performance due to easing inflation concerns as energy prices drop, eToro's Lale Akoner says. Oil prices have dropped significantly since the U.S.-Iran peace deal reached in mid-June. As a result, investors have lowered their expectations of the Bank of England raising interest rates in the coming months and currently price in an 84% probability of a BOE rate hike in December, while they fully priced in a one-quarter-point BOE rate rise prior to the Middle East peace deal, LSEG data show. (miriam.mukuru@wsj.com)

0801 ET - Improving economic performance in U.K. regions outside of London, such as Manchester, faces multiple hurdles to ensure lasting and broad-based growth, Alexander Harvey at Oxford Economics says in a note. Many urban cores remain too weak and too poorly connected to spread growth across entire regions, Harvey says. While Manchester has achieved exceptional economic growth in recent years, this hasn't translated to higher incomes and economic activity in the region's outer boroughs, he notes. "Policymakers must continue to develop critical mass in the center of cities like Manchester and invest in transport connectivity in the outer regions to deepen labor markets, unlock stronger output growth, and enable benefits to meaningfully spread across the entire city-region," Harvey says. (don.forbes@wsj.com)

0731 ET - Sterling rises slightly after Andy Burnham, the frontrunner to succeed Prime Minister Keir Starmer, vowed to boost growth across the U.K while reaffirming his commitment to meeting the fiscal rules. Burnham said his plans to improve growth and raise living standards will be backed by "sound" public finances. Burnham is widely expected to become prime minister after Starmer announced his resignation last week. Sterling rises 0.2% to an intraday high of $1.3230 after the speech from $1.3209 beforehand. The euro falls 0.1% to 0.8618 pounds from 0.8629 pounds. (renae.dyer@wsj.com)

0713 ET - Yields on U.K. government bonds, or gilts, decline as Burnham delivers his first speech since announcing his candidacy for the prime minister role. Burnham vows to drive economic growth in every part of the U.K. and reduce the welfare bill in a "fair and lasting" manner. The announcement calmed concerns about high public spending in the U.K. Ten-year gilt yields fall 0.7 basis points to last trade at 4.726%, Tradeweb data show. (miriam.mukuru@wsj.com)

0646 ET - The euro is relatively firm ahead of a busy week that could reshape expectations for monetary policy in both the euro area and the United States, DHF Capital S.A's Bas Kooijman says in a note. Attention is centered on the European Central Bank's forum in Sintra, Portugal, where policymakers could provide further insight into the outlook for inflation and interest rates, the CEO and asset manager says. "Market participants will closely follow remarks from ECB President Christine Lagarde and other members, whose comments could influence bond and currency markets," he says. Another potential driver for the euro this week is Wednesday's flash estimate June inflation report. The euro rises 0.2% to $1.1402. (emese.bartha@wsj.com)

0626 ET - The dollar could weaken by year-end as the Federal Reserve probably won't raise interest rates as markets anticipate, MUFG Bank analysts say in a note. New Fed Chairman Kevin Warsh's tough rhetoric on inflation fueled bets the Fed could lift rates. However, the Fed is likely to keep rates on hold, the analysts say. "U.S. inflation appears close to peaking and should moderate through the remainder of the year thereby easing pressure on the Fed to respond forcefully." Disinflationary pressures should build on lower energy prices and the fading effects of last year's tariff increases, they say. The potential for improved growth outside the U.S. should also weigh on the dollar, they say. (renae.dyer@wsj.com)

0556 ET - China's economy and the more traditional sectors in the equities market may face further pressure before conditions get better, Julius Baer analyst Richard Tang says. Investors appear to have low expectations for any stimulus measures from Beijing aimed at reviving domestic demand, as policymakers are focused on boosting artificial-intelligence development and strengthening economic security instead, he says. Tang expects the divergence between the real economy and the stock market to persist. AI infrastructure trades will maintain their outperformance in 2H while non-AI firms, including legacy internet companies, will likely see continuing weakness. "We believe the earliest timing for old technology [stocks] to catch up in performance will likely be 4Q," he adds. (jason.chau@wsj.com)

0550 ET - U.S. Treasury yields rise in European trade reflecting the market's continued expectation of Federal Reserve rate hikes, while the dollar is slightly lower as the U.S. and Iran make renewed diplomatic efforts for a peaceful resolution. "Although tensions escalated during the last few days, sentiment improved after reports emerged that both sides agreed to resume negotiations over the Strait of Hormuz," Exness' Dat Tong says in a note. The development revived hopes that the interim peace agreement could be preserved, reducing demand for safe-haven assets such as the dollar, the senior financial markets strategist says. The 10-year U.S. Treasury yield rises 1.4 basis points to 4.385%, according to Tradeweb. The DXY dollar index declines 0.1% to 101.267. (emese.bartha@wsj.com)

0527 ET - European Central Bank policymakers could provide some support to the euro if they keep alive the prospect of interest rate rises at the ECB's forum in Sintra, Portugal from Monday to Wednesday, ING's Francesco Pesole says. "The preference emerging from the many ECB speakers this week may well be to keep markets leaning toward a hawkish bias so that inflation expectations remain in check," he says in a note. ING expects another rate rise in September. While the euro faces a hit from any renewed dollar appreciation, ECB rate rise signals should limit losses, he says. The euro rises 0.1% to $1.1399. ING sees the euro remaining above $1.1300 with a gradual recovery towards $1.1500 in July. (renae.dyer@wsj.com)

0512 ET - Candriam moves its view on U.S. Treasury duration to a modest positive grade from neutral, implemented through the front end of the curve, Nicolas Jullien, global head of fixed income, says in a note. "This is the first time we are taking a long view on nominal rates this year, and this follows a period in which we have deliberately waited for the sell-off to create a more attractive entry point," he says. Candriam considers that the main support comes from valuations, where it sees a meaningful overshoot. "Markets are pricing a Federal Reserve [interest rate] hike before the end of the year, which we see as exaggerated," Jullien says. The two-year U.S. Treasury yield rises 1.9 basis points to 4.105%, according to Tradeweb. (emese.bartha@wsj.com)

0508 ET - Candriam stays modestly positive on Bunds, while preferring duration to non-core spread exposure, Nicolas Jullien, global head of fixed income says in a note. Bund yields marginally above 3% "still offer some value, especially in a scenario in which geopolitical tensions ease and oil prices retrace," he says. Conversely, an adverse energy shock could push yields back toward recent highs, so the position remains measured, Jullien says. He adds that the oil price remains the dominant driver of euro rates. The 10-year Bund yield last trades at 2.854%, up 0.4 basis points, according to Tradeweb.(emese.bartha@wsj.com)

0505 ET - The cost of default protection for euro denominated credit falls as U.S. and Iran pause attacks, easing concerns about renewed conflict. "Despite short term violations of the ceasefire, we believe that U.S. and Iran will agree to a deal," Jefferies economist Mohit Kumar says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 1 basis point to 247bps, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)