Sticky Inflation Fuels RBA Hike Bets

• Australian inflation came in hotter than expected, with headline CPI reaching 4.3% y/y and quarterly trimmed mean at 3.7% y/y.
• Coupled with hawkish Parliamentary testimony from Governor Bullock, markets have lifted expectations for a 25bp RBA hike next week to around 85%.
• Overnight, the Fed held rates steady at 3.75–4.00% in a 10–2 vote, with two members favouring a hike. US Treasury yields diverged following Chair Warsh’s press conference, with the 2yr yield falling ~8bps as markets interpreted his remarks as relatively dovish, while longer-dated yields rose.
• Elsewhere, the RBNZ surprised markets by holding rates at 2.75% in a narrow 4–3 decision, while the Bank of Canada hiked 25bp to 2.50%. Brent remained elevated around US$115/barrel, reinforcing concerns over persistent global inflation pressures.