Australian Bond Exchange Weekly Update
7 Aug 2026
Market Insights
- Australian Household Spending Proves More Resilient Than Expected
- Falling Oil Prices Ease Inflation Concerns
- America’s Manufacturing Revival Is Yet to Reach the Trade Data
- Diversify Your Portfolio with a New INEOS-Linked Credit Note
Key Points
- Australia: The RBA left the cash rate unchanged at 4.35% p.a. at its June meeting. June CPI eased to 3.8% p.a., while Trimmed Mean was unchanged at 3.60% p.a.
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its July 2026 meeting. The latest U.S. CPI inflation rate is at 3.5% p.a. in June 2026. Core CPI moderated further to 2.6% p.a.
- United Kingdom: The Bank of England held the Bank Rate steady at 3.75% p.a., and headline CPI for June was 2.6% p.a., down from 2.8% in May. Core inflation was unchanged at 2.6% p.a.
- Eurozone: The European Central Bank left its key deposit facility rate unchanged at 2.25% p.a., and Euro area CPI was 2.9% p.a. in July.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash Rate 4.35% p.a. | 3.8% p.a. to June 2026 |
| United States | Fed Funds 3.50%–3.75% p.a. | 3.5% p.a. to June 2026 |
| United Kingdom | Bank Rate 3.75% p.a. | 2.6% p.a. to June 2026 |
| Eurozone | Deposit Facility Rate 2.25% p.a. | 2.9% p.a. in July 2026 |
Australian Household Spending Proves More Resilient Than Expected
The ABS Household Spending Indicator surprised to the upside in June, with spending rising 0.8% over the month and quarterly growth accelerating to 5.2% annualised from 4.1% in Q1. Real household spending also remained solid, while the implied household spending deflator was a relatively modest 2.4% annualised, consistent with easing inflation pressures. While the strength of the data appears at odds with the broader narrative of a slowing economy, the ABS measure has been more volatile than CBA’s Household Spending Insights, with the official National Accounts on 2 September expected to provide a clearer picture of underlying consumption trends.Why it matters: Resilient household spending supports economic activity and suggests consumers are continuing to absorb higher borrowing and living costs. However, continued strength in demand may also slow the return of inflation to target, reinforcing the RBA’s preference to remain patient and assess incoming economic data.
Falling Oil Prices Ease Inflation Concerns
Oil prices moved lower over the past week as geopolitical risk premiums continued to unwind. Comments from President Trump and Iranian officials raised expectations that the Strait of Hormuz could reopen, easing concerns over a prolonged disruption to global oil supplies. While tensions in the Middle East remain elevated, markets appear to be assigning a lower probability to a significant supply shock.Why it matters: The decline in oil prices is significant beyond the energy sector. Lower oil prices reduce upward inflation pressure, ease input costs for businesses and provide some relief for consumers, reinforcing expectations that major central banks, including the RBA, can remain patient on interest rates. With supply fears continuing to fade, attention is likely to shift back towards underlying economic fundamentals and the outlook for global growth.
Crude oil market
WTI and Brent Crude Oil Prices
Daily benchmark prices from 7 August 2025 to 6 August 2026
America’s Manufacturing Revival Is Yet to Reach the Trade Data
The U.S. trade deficit narrowed 5.6% in June to US$73.3 billion as imports declined 1.8%, while exports eased 0.9%. The improvement follows a volatile first half of the year, with the deficit widening from US$79.0 billion in January to more than US$105.0 billion in May before retreating in June. Trade flows have been distorted by tariff policies, geopolitical tensions and shifting supply chains, making the monthly data more volatile than usual. Despite the narrower deficit, recent GDP and consumer spending data continue to point to a resilient U.S. economy. While investment in domestic manufacturing continues to accelerate, imports remain elevated as businesses purchase the machinery, technology and equipment needed to expand capacity. As a result, the benefits of America’s manufacturing revival are yet to be fully reflected in the trade balance and are likely to emerge only over time.Why it matters: A narrower trade deficit can support headline economic growth, but one month of data does not establish a sustained improvement. Continued investment in productive capacity is broadly supportive of long-term corporate growth, although the effects of America’s manufacturing investment are likely to emerge gradually.
New investment opportunity
Diversify Your Portfolio with a New INEOS-Linked Credit Note
7.50%–8.00% p.a. target return
Paid semi-annually over a five-year term and available to eligible retail and wholesale investors.
About INEOS Group
Founded in 1998, INEOS is one of the world’s largest privately owned chemical companies. Headquartered in London, the company operates approximately 154 manufacturing sites across 27 countries and employs around 26,000 people worldwide. Its growth has been driven by the strategic acquisition of chemical, refining and energy assets from major multinational companies. INEOS operates through a decentralised business model, with independent operating businesses focused on specific markets and products. Today, its operations span a broad range of sectors, including:- Petrochemicals
- Polymers
- Specialty chemicals
- Refining and energy, including oil and gas
- Automotive, including INEOS Automotive, manufacturer of the Grenadier 4X4
- Sports, including Formula One, professional cycling and football
Example: How Fixed Income Works
A company issues a debt security with the following terms:- Term: 5 years
- Coupon: 7.5% p.a., paid semi-annually
- Issue Price: A$100
- Minimum Investment: A$10,000
Investor Scenario: Semi-Annual Payments
For an investment of A$100,000, the investor receives A$3,750 every six months, calculated as 7.50% × A$100,000 ÷ 2. Over five years, the investor receives A$37,500 in total coupon income, plus the A$100,000 principal at maturity, subject to no credit event or early redemption. If the note is sold before maturity, the investor may receive more or less than A$100,000 depending on market conditions.Important: This is a credit-linked investment and capital is at risk. Coupon payments and repayment of principal are subject to the issuer meeting its obligations, the credit performance of the reference entity and the full terms of the note. If a credit event occurs, investors may lose some or all of their invested capital. The note is not a bank deposit and returns are not guaranteed.
Economic calendar
World Economic Calendar
Key economic events for 11–14 August 2026
| Date | Country | Event | Survey | Prior |
|---|---|---|---|---|
| 11 Aug, 11:30 | AU | NAB Business ConfidenceJuly | — | -5 |
| 11 Aug, 11:30 | AU | NAB Business ConditionsJuly | — | 3 |
| 11 Aug, 14:30 | AU | RBA Cash Rate Target11 August | 4.35% | 4.35% |
| 11 Aug, 14:30 | AU | RBA Statement on Monetary Policy | — | — |
| 12 Aug, 22:30 | US | CPI MoMJuly | 0.10% | -0.40% |
| 12 Aug, 22:30 | US | CPI YoYJuly | 3.40% | 3.50% |
| 13 Aug, 22:30 | US | Initial Jobless ClaimsWeek ended 8 August | 203k | 199k |
| 14 Aug, 19:00 | EC | GDP SA QoQ2Q second estimate | 0.40% | 0.40% |
| 14 Aug, 19:00 | EC | GDP SA YoY2Q second estimate | 1.00% | 1.00% |
| 14 Aug, 19:00 | EC | Trade Balance SAJune | — | -€5.0b |
| 14 Aug, 19:00 | EC | Trade Balance NSAJune | — | -€7.8b |
| 14 Aug, 19:00 | EC | Employment QoQ2Q preliminary | — | 0.10% |
| 14 Aug, 19:00 | EC | Employment YoY2Q preliminary | — | 0.50% |
| 14 Aug, 22:30 | US | Retail Sales Advance MoMJuly | 0.20% | 0.20% |
| 14 Aug | CH | BoP Current Account Balance2Q preliminary | — | US$184.3b |
Source: Economic Calendar Data.
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 7.08.2026
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