1122 ET - Japan's efforts to support the yen could have implications for U.S. government borrowing, Corpay's Karl Schamotta tells WSJ in an email. Tokyo is widely expected to intervene as the yen hits a 40-year low against the dollar. Schamotta says past interventions have seen a relatively small amount of sales from Japan's large holdings of Treasurys, since a significant selloff would cause U.S. yields to spike, further strengthening the greenback. However, Japanese FX policies could seek to keep more capital at home, hampering dollar-bound flows that for years have allowed Washington to finance its own debt. The U.S. "has grown accustomed to Japanese demand for its debt," Schamotta says. "It should not assume that demand is unconditional." (paulo.trevisani@wsj.com; @ptrevisani)

1106 ET - Inflation in Germany fell more sharply than expected in June, mainly on easing energy and food prices. Although core inflation stayed unchanged, there's little evidence of indirect effects from energy prices into costs of other goods, Commerzbank's Ralph Solveen says in a note. Based on available data, the eurozone's inflation rate for June is likely to be slightly lower than the consensus forecast of 3.0%, he says. However, oil prices are set to return to somewhat higher than current levels in the coming months, due to recurring bad news from the Middle East, Solveen says. That means inflation is likely to move sideways between 2.5% and 3%, and given companies will likely pass on higher energy costs to customers, core inflation may rise slightly again, he adds. (edward.frankl@wsj.com)

1101 ET - Geopolitical conflicts and the AI boom are driving up demand for energy supply, benefiting companies in the electricity supply chain, BlackRock Investment Institute say in a note. "Many governments and companies are prioritizing resilience [in energy supply]," they say. Assets such as power equipment, batteries, grids, and critical materials are gaining from the rising electricity demand, BlackRock Investment Institute say in a note. (miriam.mukuru@wsj.com)

1100 ET - The dollar could ease if Thursday's U.S. nonfarm payrolls report is weaker than expected, TD Securities strategists say in a note. "We think dollar strength is nearing a peak, absent reacceleration in U.S. data beyond our baseline of stability." A payrolls print that trails expectations would confirm this view, they say. Markets are betting on interest-rate rises by the Federal Reserve as they seem priced for a period of mini-exceptionalism in the U.S. Meanwhile, U.S. equity outperformance is taking a breather which could further wane the dollar's upward momentum, they say. The DXY dollar index is steady at 101.077. (renae.dyer@wsj.com)

1057 ET - Another interest-rate hike from the European Central Bank could become a policy mistake, ING global head of macro Carsten Brzeski says in a note. ECB President Christine Lagarde reiterated Monday that the June rate increase was driven by a higher inflation outlook. But with the recent drop in energy prices, chances have increased that forecasts could show inflation below 2% in 2027, Brzeski says. Judging from Lagarde's comments and other ECB officials in recent weeks, that wouldn't stop the ECB from hiking again, he notes. "As long as the core inflation forecasts aren't revised downwards, there appears little in the way to stop the ECB." But a new debate could emerge over looking through what could be a temporary energy-price shock, he says. (edward.frankl@wsj.com)

1043 ET - Credit investors should pay attention to underlying economic risks rather than dwelling on credit labels like public bond, direct loan, leveraged loan and so on, BlackRock Investment Institute say in a note. Factors such as recurring cashflow and lender protections are more accurate metrics, they say. "We favor credit where income is backed by fundamentals - and where investors are paid for liquidity and recovery risks." (miriam.mukuru@wsj.com)

1026 ET - The median U.S. luxury home sale price rose 4.7% year over year to $1.37 million during the three months ending May 31, Redfin says. That's more than triple the 1.5% gain in non-luxury sale prices. Luxury prices are increasing largely because demand for luxury homes is on the rise. Pending sales of luxury homes rose 5.2%, compared with a 3.6% gain in non-luxury pending sales, which is deceleration from the month before. High-end homebuyers are less sensitive to affordability pressures and financial instability. Overall homebuying demand has been fairly slow because mortgage rates and home prices remain high. Ultra-wealthy Americans have the freedom to make big purchases even in uncertain times. (chris.wack@wsj.com)

1006 ET - The Japanese yen reaches a new 40-year low against the dollar, though moves are limited as traders stay on high alert for any interventions by the country's authorities to halt the currency's decline. Japan could deliver another round of foreign exchange interventions, while the Bank of Japan could raise interest rates at their next meeting in July in response to the yen's weakness, TrinityBridge's Tony Whincup says in a note. "However, [Prime Minister Sanae] Takaichi's long-term economic blueprint calls for monetary policy that bolsters private demand, signalling a preference for keeping borrowing costs low." The dollar rises 0.3% to 162.50 yen, the highest since 1986, according to LSEG. It last trades at 162.41 yen. (renae.dyer@wsj.com)

0957 ET - German inflation shows very few signs of any knock-on effects from higher energy prices so far, ING's Carsten Brzeski says in a note. EU-harmonized price growth fell to 2.7% in June from 2.4% in May. What's even more important, he says, is that compared with last month, prices dropped again, the first time since the summer of 2024 that prices dropped for two months in a row. Inflation should accelerate again next month, given the end of the German government's tax rebate on fuel. However, there is still little evidence of any self-reinforcing inflationary spiral. "After last night, the sales of Germany's national football team merchandise could be another unexpected disinflationary driver in July," he adds. (edward.frankl@wsj.com)

0945 ET - Canada's economy isn't in recession, says Canadian Chamber of Commerce's Andrew DiCapua. A rebound in GDP with 0.5% on-month growth in April shows the economy is still chugging along, even if growth isn't especially strong, the economist says. DiCapua says that for the Bank of Canada, the recovery supports the view that risks are fairly balanced. "Higher inflation driven by temporary oil price spikes is one thing, but there isn't enough demand in the economy right now to suggest growth is about to reignite inflation," he says. (robb.stewart@wsj.com; @RobbMStewart)

0942 ET - Recession talk in Canada, sparked by a 0.1% annualized decline in 1Q, was for naught based on April GDP data, says Douglas Porter, chief economist at BMO Capital Markets. GDP by industry rose 0.5% in April, and 1.1% on a 12-month basis, which marks the fastest pace of year-over-year growth in seven months. Porter says GDP is on track for 2%-plus annualized growth in 2Q, given early estimate for a 0.1% jump in May. The May estimate "will serve as a reminder that Canada is still growing slower than potential," Porter says. "Nevertheless, it's also clear that the small two-quarter dip in output was a false alarm on the recession watch." (paul.vieira@wsj.com; @paulvieira)

0940 ET - Canada's GDP data for April should take some air out of the recent recession talk in the country, says Marc Ercolao, economist at TD Bank. GDP by industry rose 0.5% in April from the prior month, and that leaves quarterly GDP tracking above 2% annualized, he says. GDP growth in April was largely fueled by the commodities sector, although 14 of 20 sectors tracked by Statistics Canada recorded growth in the month. Ercolao says the economy is grinding through a soft patch. For the Bank of Canada, he adds, "this argues for patience rather than a pivot." He says the data will take pressure off BOC to cut rates to deal with the economic slump. (paul.vieira@wsj.com; @paulvieira)