Hormuz Toll Reignites Inflation Fears

• President Trump has announced a 20% toll on the value of each shipment travelling through the Strait, sending Brent crude up 10% and pushing bond yields higher globally as inflation concerns return to the forefront.
• The sell-off extended locally, with Australian government bond yields jumping 5bps across the curve, leaving the 3-year and 10-year at 4.50% and 4.91% respectively.
• Fed Governor Waller warned ahead of tonight’s US CPI release that if core inflation figures come in too hot the Fed will be forced to tighten in the near term, with markets now pricing a 45% chance of a hike at the 29 July meeting and a full hike by September.
• Domestically, consumer and business confidence figures are released today, with markets watching how cost-of-living pressures are flowing through the economy after consumer sentiment fell 2.9% to a deeply pessimistic 80.6 at the last read.