Middle East Escalation Continues

• Geopolitical tensions remain a key driver for markets. The Middle East conflict has intensified again, with threats to regional energy infrastructure. President Trump has reportedly issued Iran a 48-hour window to reopen the Strait of Hormuz, reinforcing a risk-off tone.
• Bond markets reacted quickly, with the global sell-off extending. Ten-year yields rose 11bps in the US and 13bps in the UK during Friday’s session.
• The move carried through locally, with Australian 10-year futures pushing toward 5.2%, the highest levels since 2011.
• Despite the RBA already delivering two hikes this year, markets still price further tightening, with around 70–75bps of additional increases expected by December.
• Looking ahead, the key domestic release will be February CPI on Wednesday, while international attention remains on geopolitics, including G7 foreign ministers’ talks on the Middle East conflict.