Upside CPI Surprise Pushes Yields Higher

• August CPI surprised on the upside at 3.0% y/y (vs 2.9% expected), signalling a touch more inflation pressure than both markets and the RBA had anticipated.
• The release points to Q3 trimmed mean inflation landing in the 0.9–1.0% q/q range when published next month, around 0.3ppt above RBA forecasts, with persistent services categories (restaurants, insurance, media) doing most of the heavy lifting.
• For the RBA, this means less confidence that inflation has already settled near 2.5% and reinforces the need for policy settings to stay in slightly restrictive territory for longer.
• Yields moved higher, with 3yrs up 9bp to 3.56% and 10yrs also 9bp firmer at 4.28%. Markets have pared November easing expectations to just 9bp of cuts, down from 17bp a day earlier.
• Today’s focus is on Job Vacancies, which should give a forward-looking read to complement the recent labour force data.