- Oil advanced after deadly attacks in Saudi Arabia heightened concerns that escalating Middle East hostilities could hit supply, even as exports through the Strait of Hormuz climbed back to pre-conflict levels. Brent rose 4% to settle at US$113.17/bbl.
- US Treasuries rallied as concerns over oil and AI capex spending drove a flight to quality, with the 2yr down 16bps to 4.66% and the 10yr down 15bps to 4.97%.
- Domestically, hawkish comments from RBA officials have driven a sharp repricing in hike expectations, with markets now pricing more than a 50% chance of a hike at the 3 November meeting, though a full hike isn’t priced until May next year.
- Focus now turns to next week’s CPI, which brings both quarterly and monthly figures and should offer further insight into the rate path. Headline is expected at 0.4% m/m and 4.0% y/y, with trimmed mean at 3.6% y/y, still well above the RBA’s target band.
