- Inflation remains front of mind for the RBA, with Deputy Governor Hauser flagging yesterday that price pressures are running “materially” ahead of the Bank’s August forecasts. On jobs, he acknowledged a slight softening in the latest data but played it down as only marginal.
- His remarks sharpened rate expectations, with the probability of a November hike more than doubling from around 25% pre-speech to 57% this morning.
- Australian bonds sold off on the back of it, with 3-year futures moving up to 4.95% from 4.90% and the 10-year adding 6bps to 5.33%.
- Offshore, US 10-years ticked 1bp higher to 5.12%, but France drew the most attention as its 10-year yield surged 9bps to 5.01%. Breaching 5% for the first time since 2002 has widened the gap to German Bunds to around 160bps, a level not seen in over a decade.
