The New Normal

• Markets are increasingly confident that crude flows from the Middle East will continue despite renewed tensions, with easing oil prices a sign participants expect supply to normalise and view the latest escalation as contained.
• US Treasuries advanced as the pullback in oil reduced inflation concerns, with the 10-year yield down 2bps and the 2-year falling 3bps, while Australian 2-year government bond yields fell 5bps.
• Nothing of note on the local calendar today, so attention turns to next week where consumer confidence for July and business confidence for June are due, ahead of inflation expectations later in the week.
• In the US, June inflation data is also released next week, which will be closely watched given the Fed’s caution on the inflation outlook and recent concerns about the role AI will play going forward.