Macro

The Reserve Bank of Australia raised its official cash rate to 4.6% last week, the highest level in 15 years, with financial markets pricing in at least one additional hike. Against that backdrop, the preliminary auction clearance rate over the weekend fell sharply to 48.2%, the second-lowest reading so far this year. Home values across the five major capital cities are down 6.6% from their early-April peak, leaving the market 2 percentage points short of the sharpest price correction in more than 40 years.

A weaker-than-expected U.S. jobs report pushed the unemployment rate up to 4.2% and led markets to sharply increase bets that the Federal Reserve will pause rate hikes. Traders are now pricing an 83% probability the Fed holds rates in October. U.S. equity futures rose about 1%, led by Nasdaq futures up 1.4%, while Treasury yields fell across the curve with the 2-year yield down 7.1 basis points. Oil prices also eased, with Brent trading around $99.50 a barrel.

Commonwealth Bank CEO Matt Comyn said a November rate increase remains on the table, with the Reserve Bank’s next move hinging on quarterly inflation data due at the end of the month. He said CBA believes the central bank has finished raising rates for now, but described the RBA board’s final meeting of the calendar year as “live”. Comyn also noted national house prices fell 8.2 per cent when rates last peaked in 2023, and urged a stronger focus on productivity to lift economic growth.

Fresh volatility in bond markets put pressure on stock markets worldwide. The U.S. 10-year Treasury yield swung, while U.K. and French government bond yields jumped sharply overnight before seesawing again. The S&P 500 fell 0.3%, the Dow dropped 255 points, and the Nasdaq composite lost 0.4%. Losses were steeper in Europe, with London’s FTSE 100 down 1.6% and Paris’s CAC 40 off 1.5%.

During its fiscal 2026 fourth-quarter earnings call, FactSet said it expects fiscal 2027 organic annual subscription value (ASV) growth of 5% to 6.5% and margin improvement of 25 to 75 basis points. The company also highlighted record ASV, momentum in artificial intelligence and its MCP business, and the BCC acquisition. It characterized the outlook as a routine annual guide rather than an unexpected market catalyst.

US inflation remained sticky in August, with the Personal Consumption Expenditures price index rising 0.3% month over month and holding at 3.4% year over year. The monthly pickup was driven mainly by higher fuel and other energy prices linked to the war in Iran. Economists had expected a 0.4% monthly increase and a 3.7% annual rate.

Dovish-leaning comments from Federal Reserve officials weighed on expectations for further rate increases, sending U.S. Treasury yields down on Wednesday from multiyear highs. The 10-year yield fell to 5.214% and the 30-year slipped to 5.550%, after the two benchmarks touched 19-year and 24-year peaks, respectively. Money markets cut the implied chance of a rate hike in October to 45% from 70%. European government bond yields also declined, with German and U.K. yields moving lower in tandem.

The Reserve Bank of Australia lifted its cash rate by 25 basis points to 4.6%, the fourth increase this year and the highest level since November 2011. Australia’s four largest banks said they will raise variable home-loan rates by 25 basis points from October 9. The moves come as lenders point to persistent inflation, ongoing global uncertainty and broader economic pressures.

Australia’s Bureau of Statistics reported annual CPI inflation rose 4% in August, slightly below the 4.1% expected by the market. The RBA-watched trimmed mean measure held at 3.6% for a third straight month. Following the release, markets sharply pared back expectations for a November rate increase, putting the probability at about 20%.

Australia’s CPI inflation rose to 4% year on year in August, a four-month high, up from 3.5% in July. Housing costs were the main driver, rising 5.7%, while transport costs increased 5.6% due to higher fuel prices. Underlying inflation was unchanged at 3.6%. The figures were released a day after the Reserve Bank raised the cash rate to 4.6%, pointing to renewed price pressures.