Oil Retreat Lifts Risk Sentiment
- Oil prices fell sharply overnight, with Brent down around 7% to US$91/bbl as hopes for progress in US-Iran talks eased immediate supply risks. Brent is now down more than 20% month-to-date.
- Risk sentiment improved as oil eased, with US equities rebounding while Treasury yields edged higher as haven demand faded. The 2-year rose around 3bps to 4.54%, the 10-year held near 4.86%, while the 30-year eased slightly.
- RBA Chief Economist Sarah Hunter said AI could add to inflation in the near term before boosting productivity over time, reinforcing the need for the RBA to remain watchful of emerging inflation pressures.
- US CPI is the key offshore focus today, with core inflation expected at 0.2% m/m. NY Fed one-year inflation expectations held near 3.9%, while Chicago Fed President Austan Goolsbee stressed persistent inflation pressures.
- Westpac Consumer Sentiment and the NAB Business Survey are due at 11:30am AEDT.
