All Eyes on February CPI

• Markets lost momentum through Tuesday’s session. Early optimism around potential US–Iran dialogue faded quickly, with sentiment turning cautious as oil prices and global bond yields both pushed higher.
• In rates, pressure was most evident at the front end of the US Treasury curve following a weak 2-year auction. Demand softened, with the bid-to-cover ratio at 2.44, down from 2.63 previously and the lowest since May 2024.
• In Australia, the latest S&P Global PMI data pointed to slowing activity. Manufacturing eased to 50.1 in March from 51.0, barely holding expansion territory.
• Services saw a sharper slowdown, with the Business Activity Index falling to 46.6 from 52.8, pulling the Composite PMI down to 47.0 from 52.4 — the first contraction signal in around 18 months.
• Focus now turns to February CPI, where consensus expects headline inflation at 3.8% y/y and trimmed mean at 3.4% y/y, reflecting inflation conditions before the latest Middle East escalation.