Restrictive enough?

• Volatility expectations have come down as Trump shifts from military intervention to economic pressure on Iran, with oil easing alongside. The US treasury curve moved lower with the 10yr down 5bps to 4.64%.
• Soft US PPI added to the move, coming in unchanged on a headline basis and up 0.2% excluding food and energy. Building on an in line inflation read, weak payrolls and rising jobless claims, this has eased expectations of a Fed hike to just 35%, though the terminal rate still implies around 1.4 hikes at the top of the curve.
• Prime Minister Albanese held a press conference this morning following a “lengthy and productive” call with President Trump, in which they reviewed tariff treatment, Australian superannuation investment in the US and the prospect of an end to the war with Iran.
• Speaking at a fireside chat yesterday, RBA Assistant Governor Kent discussed the tightening of policy, noting the housing market has weakened by more than this year’s three hikes would imply, with recent budget changes adding to the slowdown. Whether the RBA can look through near term inflation concerns or judges one more hike necessary remains to be seen, with only 15% priced for the upcoming meeting.