RBA Rate Decision in Focus as Hike Expectations Build

• All eyes are on the RBA decision tomorrow, with 25 of 32 analysts polled by Bloomberg expecting a 25bp hike amidst persistent inflationary pressures
• Markets now price a 70% chance of a 25bp RBA hike at the 3 February meeting, with roughly two hikes expected by end-2026, reflecting firm domestic inflation concerns.

• US bond yields drifted lower, with the 2yr falling to 3.52% and the 10yr to 4.23%, as markets reacted to Kevin Warsh’s Fed Chair nomination and ongoing geopolitical tensions. The S&P 500 slipped 0.4%, while gold sold off sharply on the policy shift.

• The Warsh appointment is seen as a more hawkish turn for the Fed, prompting a repricing in rate expectations and tighter global financial conditions, keeping pressure on rate-sensitive sectors.

• Australian yields followed the global move, with 3yr futures easing to 4.25% and the 10yr to 4.82%, as markets position ahead of key domestic policy signals.