Central Bank Speakers Lead Markets Overnight

• The main driver overnight was another round of Fed commentary. Musalem backed last week’s 25bp cut as precautionary support for the labour market but warned further easing risks becoming “overly accommodative.”
• Similarly, Governor Hammack echoed the cautious tone, noting inflation remains too high for aggressive further easing.
• Yields have drifted higher with the US 2yr rising from 3.57% to 3.60%, while the 10yr firmed from 4.12% to 4.15%. Markets now price an 85% chance of another 25bp cut at the 30 October FOMC meeting.
• At home, RBA Governor Bullock noted inflation has fallen “substantially” back inside the 2–3% band, while the labour market is “close to full employment.” The tone leaned hawkish, nudging 3yr bond yields slightly higher.
• Markets continue to price just a 5% chance of a cut at the 30 September RBA meeting, with around two further moves expected by early 2026 as part of the current easing cycle.