Oil Rebuilds the Inflation Risk Premium

• Brent crude pushed back above US$90/bbl after Iran seized an oil tanker in the Strait of Hormuz and rhetoric pointed to a more prolonged conflict. The move has rebuilt some of the energy-driven inflation premium markets had recently begun to unwind.
• Sovereign bond curves bear steepened as oil rose, with US 10-year Treasury yields up around 3bps and 2-year yields up 1bp. Australian yields followed, with the 3-year up 3bps and 10-year up 4bps, while markets still imply little chance of an RBA hike this year.
• Alphabet is looking to raise up to A$5 billion in its first Australian bond deal, potentially making it the country’s largest corporate debt transaction. The issuance highlights the scale of funding being raised globally to support AI investment and adds notable supply to the domestic credit market.
• The local data calendar is light, with ANZ-Roy Morgan Consumer Confidence at 9:30am followed by Westpac Consumer Confidence at 10:30am. Both will offer a timely read on household sentiment as higher rates and energy costs continue to weigh on consumers.