RBA Hike Expected as Global Yields Ease

• Attention is firmly on the RBA’s policy decision today, with markets now pricing roughly a 67% chance of a 25bp rate hike, reflecting ongoing concerns around persistent domestic inflation, resilient growth and supply capacity.
• As a result domestic Australian bond yields have moved higher ahead of the decision, with the 10-year rising to around 5.00%, while 3-year futures traded between 4.54–4.60% as markets position for further tightening.
• Oil prices eased despite ongoing Middle East tensions. Brent oil fell 2.8% to around $100/bbl as hopes grew that tankers may continue to pass through the Strait of Hormuz, helping lift global equity markets with the S&P 500 up 1.0%.
• Data from China pointed to a firmer start to the year, with retail sales rising 2.8% y/y (vs 2.5% expected), driven by Lunar New Year discretionary spending.