Australian Bond Exchange Weekly Update
25 Jun 2026
Market Insights
- Australia’s May inflation drops to 4.0% p.a.
- Sydney Airport 2030 inflation-linked bond: a great way to hedge against inflation
- UK – 7 prime ministers in 10 years
- US preliminary PMIs strengthened in June
Key Points
- Australia: The RBA left the cash rate unchanged at 4.35% p.a. at its June meeting. May CPI eased to 4.0% p.a., while Trimmed Mean rose to 3.60% p.a. (up from 3.4% p.a. in April).
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50–3.75% p.a. at its June 2026 meeting. The latest U.S. CPI inflation rate is 4.2% p.a. as of May 2026. Core CPI was more contained at 2.9% p.a.
- United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a., and CPI for May was 2.8% p.a., with Core CPI slowing to 2.6% p.a.
- Eurozone: The ECB increased its key deposit facility rate by 0.25% to 2.25% p.a. Recent data show inflation in the euro area rose to 3.2% p.a. in May, up from 3.0% in April.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash Rate 4.35% p.a. | 4.0% p.a. to May 2026 |
| United States | Fed Funds 3.50–3.75% p.a. | 4.2% p.a. to May 2026 |
| United Kingdom | Bank Rate 3.75% p.a. | 2.8% p.a. to May 2026 |
| Eurozone | Deposit Facility Rate 2.25% p.a. | 3.2% p.a. in May 2026 |
Australia’s May Inflation Drops to 4.0% p.a.
A 0.7% monthly drop in Australia’s consumer price index pulled annual headline inflation down to 4.0% in May. Significant downward pressure came from transport costs, which plummeted due to a sharp 11.9% monthly drop in fuel prices. Discretionary spending also softened, with lower costs for clothing, footwear, recreation, culture, and domestic travel causing the main misses against forecasts. Conversely, a strong housing component added 0.1 percentage points to the index, driven by broad-based price increases across electricity, rents, and new dwellings. While headline inflation proved softer than projected, the core trimmed-mean inflation rose 0.4% MoM and 3.6% annually, matching forecasts.
Why is this important: The underlying measure remains well above the Reserve Bank of Australia’s target range. Consequently, financial markets are currently pricing in a 25% chance of an RBA interest rate increase at its next board meeting in August.
Sydney Airport 2030 Inflation-Linked Bond: A Great Way to Hedge Against Inflation
We are currently building a book for the Sydney Airport CPI+3.12% 2030 inflation-linked bond, which offers an attractive way to hedge your fixed income portfolio against inflation. Please email us or contact your advisor if you are interested.
How does an inflation-linked bond work?
Inflation-linked bonds are bonds where the value and/or interest payments increase with inflation. When inflation rises, the bond's principal is adjusted upward, and the coupon is paid on the upward-adjusted principal. This helps protect your money's purchasing power from rising prices.
Talk to an Advisor to Learn More
UK Faces 7th Prime Minister in 10 years
Earlier this week, the sixth post-Brexit prime minister resigned. Keir Starmer, who won a landslide election less than two years ago, lost the trust of voters and many officials in his own party. The recent resignation of the British Prime Minister highlights a decade of political turmoil that began with the Brexit vote. As the country prepares for its seventh leader in ten years, deep-rooted economic challenges, exacerbated by leaving the European Union, remain severe enough that a simple change in leadership cannot resolve them.
US Preliminary PMIs Strengthened in June
US preliminary PMIs strengthened in June, with the S&P Global Composite PMI rising to 52.2 from 51.5 in May, signalling continued expansion in private-sector activity. The three-month average remains near 51.8, consistent with moderate economic growth and supportive of credit fundamentals. However, the S&P PMI continues to point to a softer growth backdrop than the ISM Composite Index, which is closer to 54 and implies stronger momentum.
Why is this important: The June PMI data indicate that US economic growth remains solid and has strengthened modestly from May. This reinforces a higher-for-longer Fed outlook by reducing the urgency for rate cuts.
Economic calendar
World Economic Calendar
Scheduled economic releases and policy events for 30 Jun – 02 Jul 2026.
| Date / Time | Country | Event | Period | Survey | Prior |
|---|---|---|---|---|---|
| Tue, 30 Jun11:30 AM | AU | RBA Minutes of June Policy MeetingPeriod: — | — | — | — |
| Tue, 30 Jun11:30 AM | CH | Manufacturing PMIPeriod: Jun | Jun | 50.1 | 50 |
| Tue, 30 Jun11:30 AM | CH | Non-manufacturing PMIPeriod: Jun | Jun | 49.9 | 50.1 |
| Wed, 01 Jul7:00 PM | EC | CPI YoYPeriod: Jun P | Jun P | -- | 3.20% |
| Wed, 01 Jul7:00 PM | EC | CPI MoMPeriod: Jun P | Jun P | -- | 0.10% |
| Thu, 02 Jul11:30 AM | AU | Trade BalancePeriod: May | May | -- | A$1791m |
| Thu, 02 Jul7:00 PM | EC | Unemployment RatePeriod: May | May | -- | 6.30% |
| Thu, 02 Jul10:30 PM | US | Change in Nonfarm PayrollsPeriod: Jun | Jun | 130k | 172k |
| Thu, 02 Jul10:30 PM | US | Initial Jobless ClaimsPeriod: 27-Jun | 27-Jun | -- | -- |
Market Insights
- Australia’s May Inflation Drops to 4.0% p.a.
- Sydney Airport 2030 Inflation-Linked Bond: A Great Way to Hedge Against Inflation
- UK – 7 Prime Ministers in 10 years
- US preliminary PMIs strengthened in June
Key Points:
- Australia: The RBA left the cash rates unchanged at 4.35% p.a. at its June meeting. May CPI eased to 4.0% p.a., while Trimmed Mean rose to 3.60% p.a. (up from 3.4%p.a. in April).
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its June 2026 meeting. The latest U.S. CPI inflation rate is at 4.2% p.a. as of May 2026. Core CPI was more contained at 2.9% p.a.
- United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a., and CPI for May was 2.8% p.a., with Core CPI slowing to 2.6% p.a.
- Eurozone: The European Central Bank increased its key deposit facility rate by 0.25% to 2.25% p.a., and recent data show inflation in the euro area increased to 3.2% p.a. in May, up from 3.0% in April.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash Rate 4.35% p.a. | 4.0% p.a. to May 2026 |
| United States | Fed Funds 3.50–3.75% p.a. | 4.2% p.a. to May 2026 |
| United Kingdom | Bank Rate: 3.75% p.a. | 2.8% p.a. to May 2026 |
| Eurozone | Deposit Facility Rate: 2.25% p.a. | 3.2% p.a. in May 2026 |
Australia’s May Inflation Drops to 4.0% p.a.
Sydney Airport 2030 Inflation-Linked Bond: A Great Way to Hedge Against Inflation
We are currently building a book for the Sydney Airport CPI+3.12% 2030 inflation-linked bond, which offers an attractive way to hedge your fixed income portfolio against inflation. Please email us or contact your advisor if you are interested.
How does an inflation-linked bond work?
Inflation-linked bonds are bonds where the value and/or interest payments increase with inflation. When inflation rises, the bond’s principal is adjusted upward, and the coupon is paid on the upward-adjusted principal. This helps protect your money’s purchasing power from rising prices.
UK Faces 7th Prime Minister in 10 years
Earlier this week, the sixth post-Brexit prime minister resigned. Keir Starmer, who won a landslide election less than two years ago, lost the trust of voters and many officials in his own party. The recent resignation of the British Prime Minister highlights a decade of political turmoil that began with the Brexit vote. As the country prepares for its seventh leader in ten years, deep-rooted economic challenges, exacerbated by leaving the European Union, remain severe enough that a simple change in leadership cannot resolve them.
US preliminary PMIs strengthened in June
US preliminary PMIs strengthened in June, with the S&P Global Composite PMI rising to 52.2 from 51.5 in May, signalling continued expansion in private-sector activity. The three-month average remains near 51.8, consistent with moderate economic growth and supportive of credit fundamentals. However, the S&P PMI continues to point to a softer growth backdrop than the ISM Composite Index, which is closer to 54 and implies stronger momentum.
Why is this important: The June PMI data indicate that US economic growth remains solid and has strengthened modestly from May. This reinforces a higher-for-longer Fed outlook by reducing the urgency for rate cuts.
*Data accurate as at 25.06.2026
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