Australian Bond Exchange Weekly Update
28 Aug 2026
Market Insights
- Australian CPI Print Raises the Pressure on the RBA
- US PMI Surprised to the Upside
- US Inflation Remains Sticky
Australian CPI Print Raises the Pressure on the RBA
Key Points
- Australia: The RBA left the cash rate unchanged at 4.35% p.a. at its August meeting. July CPI eased to 3.5% 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 eased to 3.4% p.a. in July 2026. Core CPI moderated further to 2.5% p.a.
- United Kingdom: The Bank of England held the Bank Rate steady at 3.75% p.a. at its July 2026 meeting. Headline CPI rose to 2.9% p.a. in July, while Core CPI remained 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 stands at 2.9% p.a. in July.
Here are the latest monetary-policy and inflation figures for key economies:
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash rate 4.35% p.a. | 3.6% p.a. to July 2026 |
| United States | Fed Funds 3.50–3.75% p.a. | 3.4% p.a. to July 2026 |
| United Kingdom | Bank rate 3.75% p.a. | 2.9% p.a. to July 2026 |
| Eurozone | Deposit facility rate 2.25% p.a. | 2.9% p.a. in July 2026 |
CPI Print Raises the Pressure on the RBA
The July CPI was hotter than expected, despite headline inflation easing from 3.8% to 3.5% year-on-year. The key concern was underlying inflation, with trimmed mean inflation remaining at 3.6% and rising 0.5% month-on-month. The monthly CPI increased 1.0%, driven particularly by a 7.5% increase in automotive fuel prices, while housing remained a significant contributor to annual inflation.
Australian inflation
Trimmed Mean CPI
Underlying inflation journey · June 2024 to July 2026
Monthly trimmed mean inflation. Hover over individual dots on desktop to view the monthly reading.
The release has materially shifted expectations for the RBA. Deutsche Bank now expects a 25bp hike to 4.60% at the 29 September meeting, arguing that the strength in trimmed mean inflation indicates further tightening is required despite softer economic activity and falling house prices. Westpac remains more cautious, acknowledging that the risk of a November hike has increased but continuing to expect the RBA to remain on hold for the rest of 2026. This divergence reflects the difficult policy trade-off facing the RBA, with persistent underlying inflation running above target while broader economic activity and labour market conditions are softening. Recent market pricing has also shifted significantly towards another hike this year.
Market pricing
WIRP Changes
Last Price · 27 August 2025 to 27 August 2026
WIRP Last Price observations supplied for the period 27 August 2025 to 27 August 2026.
Higher cash rates are ultimately designed to slow economic activity and bring inflation back under control. As monetary policy works its way through household and business finances, the cumulative impact of higher borrowing costs should place further pressure on consumption, investment and economic growth. If growth slows sufficiently and inflation continues to moderate, the RBA may eventually have room to reduce cash rates.
For investors sitting in cash or very short-term deposits, this creates reinvestment risk. While cash rates are currently attractive, those rates are variable and can fall relatively quickly once the RBA begins its easing cycle. Investors who wait for rate cuts to become obvious may find that the most attractive longer-term yields have already moved lower.
This is why we believe the current environment presents an opportunity to start locking in attractive yields across 3 to 5 year fixed income securities. Rather than trying to time the exact peak in interest rates, investors can consider extending duration gradually and securing today’s yields for longer.
US PMI Surprised to the Upside
The S&P Global Composite PMI rose to 56.0 from 54.5 in July, its highest level since April 2022, while the Services PMI increased to 56.8 from 54.6, marking the strongest services-sector growth since December 2024.
The improvement was driven primarily by services, with stronger demand and business activity more than offsetting a modest slowdown in manufacturing. The Manufacturing PMI fell to 53.2 from 53.9 but remained comfortably in expansionary territory.
The strength of the data is significant for fixed income markets. The PMI suggests that the US economy is retaining considerable momentum despite tighter financial conditions and ongoing geopolitical uncertainty.
As Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted:
US Inflation Remains Sticky
The latest US PCE inflation data showed that price pressures remain elevated, with headline PCE rising 3.7% year-on-year in July and core PCE at 3.3%.
At the same time, the economy is showing signs of moderation, with Q2 GDP growth at a 1.5% annualised pace. This leaves the Fed facing a difficult balancing act between sticky inflation and slowing growth.
Economic calendar
World Economic Calendar
Week of 31 August 2026
| Date | Country | Event | Survey | Prior |
|---|---|---|---|---|
| 1 Sep 2026 11:30 | AU | BoP Current Account Balance 2Q | — | -A$27.1b |
| 1 Sep 2026 11:30 | AU | Building Approvals MoM Jul | — | 7.20% |
| 1 Sep 2026 19:00 | EC | CPI YoY Aug P | — | 2.90% |
| 1 Sep 2026 19:00 | EC | CPI MoM Aug P | — | 0.20% |
| 1 Sep 2026 19:00 | EC | Unemployment Rate Jul | — | 6.30% |
| 2 Sep 2026 11:30 | AU | GDP SA QoQ 2Q | 0.40% | 0.30% |
| 2 Sep 2026 11:30 | AU | GDP YoY 2Q | 1.90% | 2.50% |
| 3 Sep 2026 11:30 | AU | Trade Balance Jul | — | A$1929m |
| 3 Sep 2026 11:30 | AU | Exports MoM Jul | — | 9.60% |
| 3 Sep 2026 11:30 | AU | Imports MoM Jul | — | -0.20% |
| 3 Sep 2026 19:00 | EC | PPI MoM Jul | — | -0.30% |
| 3 Sep 2026 19:00 | EC | PPI YoY Jul | — | 4.60% |
| 3 Sep 2026 22:30 | US | Trade Balance Jul | -$71.6b | -$73.3b |
| 3 Sep 2026 22:30 | US | Initial Jobless Claims 29-Aug | — | — |
| 4 Sep 2026 19:00 | EC | Retail Sales MoM Jul | — | -0.30% |
| 4 Sep 2026 19:00 | EC | Retail Sales YoY Jul | — | 0.70% |
| 4 Sep 2026 22:30 | US | Unemployment Rate Aug | 4.20% | 4.10% |
Source: Economic Calendar Data.
Market Insights
- RBA Holds at 4.35% – But the Door to Further Tightening Remains Open
- New: Earn 8.00% p.a. with the INEOS Group Credit-Linked Note
Key Points
- Australia: The RBA left the cash rate unchanged at 4.35% p.a. at its August 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 eased to 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 |
RBA Holds at 4.35% – But the Door to Further Tightening Remains Open
As widely expected, the RBA left the cash rate unchanged at 4.35% this week. The more important question for fixed-income investors, however, is what sits behind the decision: inflation remains too high, while the Bank is still assessing how much of the tightening delivered earlier this year is flowing through to demand. Governor Michele Bullock has been clear that monetary policy operates with a lag. In her 28 July speech, she noted that “the full effects of increases in the cash rate from earlier in the year will take time to materialise.” She also said the Board remains focused on preventing elevated cost pressures from becoming entrenched and is prepared to increase the cash rate further if needed. That message remains relevant following the August decision. The RBA said inflation is still too high and that it will continue to assess how the economy is evolving. While financial conditions are now tighter following three increases in the cash rate earlier this year, the Bank continues to see upside risks to inflation. The August statement also indicated that inflation is not expected to return to around the midpoint of the target range until late 2027.RBA rate outlook
RBA Cash Rate & Implied Overnight Rate Outlook
Actual RBA cash-rate observations and the forward implied overnight-rate path on one continuous timeline.
Hover or tap any data point to see the exact date and rate.
Actual observations shown from 31 December 2024 to 11 August 2026. The implied-rate path continues from the latest actual observation through the supplied forward points to 14 December 2027, using the same y-axis scale.
Why does this matter for fixed-income investors? The appeal of sitting in cash or term deposits is understandable while short-term rates remain elevated. But that strategy comes with an important reinvestment risk. As restrictive monetary policy works through the economy, growth should moderate and inflation should continue to ease, creating the conditions for interest rates to fall again. When that happens, investors rolling maturing term deposits or reinvesting cash may find that the attractive yields available today are no longer available.
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 (oil and gas)
- Automotive (INEOS Automotive, manufacturer of the Grenadier 4X4)
- Sports (including Formula One, professional cycling and football)
Investment Overview
| Issuer | C2 Specialist Investment Pty Ltd (ACN 622 433 043) |
| Product | INEOS Group – Credit Linked Security |
| Type | Fixed Income Investment |
| Coupon | 8.00% p.a., paid semi-annually |
| Term | 20/06/2031 |
| Currency | AUD |
| Min. Investment | $10,000 |
| Eligibility | Retail and Wholesale Investors |
Example: How Fixed Income Works
A company issues a debt security with the following terms:Important Risks
Capital invested in the Units is at risk. There is no capital protection or guarantee of financial return. The Units reference the credit of the Reference Entity and include a risk of capital loss in part or in whole as a result of Credit Event(s).
View all key risks
- Capital invested in the Units is at risk: There is no capital protection or guarantee of financial return in respect of your investment in the Units.
- Credit exposure to Reference Entity: The Units will reference the credit of the Reference Entity, therefore the Units include a risk of capital loss in part or in whole, as the result of Credit Event(s) occurring with respect to the Reference Entity.
- Credit Rating: Investors should be aware that credit ratings do not constitute a guarantee of the quality of the Units or the Reference Entity.
- Secondary Offer Period: Investors who purchase Units in the Secondary Offer Period at an Issue Price greater than the Initial Issue Price of $100.00 will receive a lower overall return, as the Final Value and Coupons are calculated with respect to the Initial Issue Price of $100.00 per Unit.
- Performance of the Reference Entity: Historical performance of the Reference Entity should not be taken as an indication of the future performance of the Reference Entity during the Investment Term.
- Value of the Units before the Maturity Date: The Final Value of the Units is calculated by reference to the Reference Entity and its overall creditworthiness between the First Credit Event Occurrence Date to the Scheduled Last Credit Event Occurrence Date. The market value of the Units before the Maturity Date will be determined by many factors and may be less than what you paid for the Units.
- Liquidity risk: You may not be able to realise your investment when you want to. The Issuer Buy-Back facility is at the discretion of the Issuer. Issuer Buy-Back requests are determined in the Issuer’s discretion.
- Early Maturity: The Units may mature early following an Early Maturity Event, including as a result of an Adjustment Event or Market Disruption Event or if a Credit Event or a Compulsory Early Redemption occurs or if your request for an Issuer Buy-Back is accepted.
- Indirect Investment Risk: Compared to a direct investment (including bonds) in the Reference Entity, the investor will not be entitled to receive dividend or other payments (if any) nor have any voting rights for corporate actions to do with the Reference Entity, including if a Credit Event occurs.
- Counterparty Risk: Investors are subject to counterparty credit risk with respect to the Issuer and the Hedge Counterparty.
An investment in the Units is not equivalent to an investment in the bonds of the Reference Entity.
Economic calendar
World Economic Calendar
Week of 17 August 2026
| Date | Country | Event | Survey | Prior |
|---|---|---|---|---|
| 17 Aug 2026 12:00 | CH | Retail Sales YoYJul | 1.50% | 1.00% |
| 18 Aug 2026 10:30 | AU | Westpac Consumer Conf SA MoMAug | — | 4.10% |
| 18 Aug 2026 10:30 | AU | Westpac Consumer Conf IndexAug | — | 83.9 |
| 18 Aug 2026 22:30 | US | Import Price Index MoMJul | — | 0.30% |
| 18 Aug 2026 22:30 | US | Import Price Index YoYJul | — | 7.10% |
| 18 Aug 2026 22:30 | US | Export Price Index MoMJul | — | -0.60% |
| 18 Aug 2026 22:30 | US | Export Price Index YoYJul | — | 10.20% |
| 19 Aug 2026 19:00 | EC | CPI YoYJul F | — | 2.90% |
| 19 Aug 2026 19:00 | EC | CPI MoMJul F | — | 0.20% |
| 19 Aug 2026 19:00 | EC | CPI Core YoYJul F | — | 2.50% |
| 20 Aug 2026 04:00 | US | FOMC Meeting Minutes29-Jul | — | 0 |
| 20 Aug 2026 11:30 | AU | Employment ChangeJul | — | 76.3k |
| 20 Aug 2026 11:30 | AU | Unemployment RateJul | — | 4.40% |
| 20 Aug 2026 11:30 | AU | Participation RateJul | — | 67.00% |
| 20 Aug 2026 22:30 | US | Initial Jobless Claims15-Aug | — | — |
Source: Economic Calendar Data.
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 28.08.2026
Disclaimer: This webpage has been prepared by Australian Bond Exchange Pty Ltd ACN 605 038 935 AFSL 484453 (ABE). The information contained in it is of a general nature only. It was prepared without considering your financial needs, circumstances and objectives. Before investing in this security, you should consider whether it is appropriate for your circumstances and review the Master PDS and PDS. This website may contain links to other third-party websites, some of which require a subscription to read. Such links are for your convenience only, and ABE does not recommend or endorse these third-party sites. No representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions, or other information contained in this website. This website may contain certain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors, many of which are beyond our control. Past performance is not an indication of future performance. To the maximum extent permitted by law ABE disclaims all liability and responsibility for any direct or indirect loss or damage that you may suffer as a result of relying on anything on this webpage.