Australian CPI in Focus as Fed Caution Keeps Markets Guarded

• Focus today is on the Australian CPI indicator, with headline inflation expected to lift to 3.3% year on year, driven by higher electricity costs.
• While in the US, Fed Chair Powell highlighted rising risks on both sides of the mandate, keeping investors cautious and offering no firm guidance on the policy path.
• US bond yields eased modestly, with the 2yr at 3.58% and the 10yr at 4.11%, reflecting hesitation to price in an aggressive easing cycle.
• Expectations are looking at a 90% chance of a 25bp Fed cut at the 30 October meeting, supporting assumptions for a gradual adjustment in policy.
• In Australian yields tracked wayside, with the 3yr at 3.46% and the 10yr down to 4.29%; markets price a 5% chance of an RBA cut at the meeting next week.
• Across the market Gold has surged to a record above $3,765/oz on strong Chinese demand, while US equities retreated (S&P 500 -0.6%, NASDAQ -1%).