Australian Bond Exchange Weekly Update
27th Feb 2026
Key Points
- Australia: The RBA increased cash rates by 0.25% to 3.85% p.a. at its February meeting – the first hike since 2023. January CPI was unchanged at 3.8% p.a., while the Trimmed Mean rose 3.4% p.a.
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its January 2026 meeting, signalling a pause in the easing cycle amid mixed economic data and inflation that remains above target. CPI inflation was 2.4% (YoY) as of January 2026. The U.S. fiscal deficit remains structurally large.
- United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a. in early February 2026. CPI declined to 3.0% in the 12 months to January 2026, down from 3.4% in December 2025.
- Eurozone: The European Central Bank kept its key deposit facility rate unchanged at 2.00% p.a. Inflation in the euro area slowed to 1.7% (YoY) in January 2026 (flash estimate), down from 2.0% in December.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash rate 3.85% p.a. | 3.8% p.a. to January 2026 |
| United States | Fed Funds 3.50–3.75% p.a. | 2.4% p.a. to January 2026 |
| United Kingdom | Bank Rate 3.75% p.a. | 3.0% p.a. to January 2026 |
| Eurozone | Deposit facility rate 2.00% p.a. | 1.7% p.a. to January 2026 (flash) |
Market Insights
- A new 6.7% p.a. A$ Credit-Linked Note over SoftBank has been launched-allocations are limited
- Australian January CPI was unchanged at 3.8% p.a.
- Australian unemployment rate held steady at 4.1% in January
- The US Fiscal Deficit remains structurally large
Australian January CPI was unchanged at 3.8% p.a.
The Australian headline inflation rate remained unchanged at 3.8%p.a. in January, coming in above economists’ expectations and showing no further progress toward the Reserve Bank of Australia’s target band as policymakers weigh whether to lift interest rates next month.
New data from the Australian Bureau of Statistics also showed that underlying inflation, the central bank’s preferred measure which excludes the most volatile price movements, increased to 3.4%p.a. over the year. Economists had forecast trimmed mean inflation of 3.3%p.a. and headline inflation of 3.7%p.a.
The strongest contributors to price growth were housing, which rose 6.8%p.a., food and non-alcoholic beverages, up 3.1%p.a., and recreation and culture, which increased 3.7%p.a.
Australian unemployment rate held steady at 4.1% in January
The Australian unemployment rate held broadly steady at 4.1% in January. This marks a clear break from the gradual uptrend that defined most of 2025, which saw the unemployment rate lift from a quarterly average of 4.0% in Dec-24 to 4.3% in Sep-25.
Moving forward to Dec-25, it dropped to 4.2% and is now looking closer to a 4.1% average. This is despite labour demand that is by no means ‘strong’ – on a three-month average basis, annual employment growth is still well below its long-run average.
This update is likely to heighten the RBA’s concern about the inflation outlook. Given the RBA Board still views the labour market as tight, any evidence of a possible ‘re-tightening’ in labour market conditions would raise some concern about inflation’s persistence.
The US fiscal deficit remains structurally large
The US Congressional Budget Office recently projected that the US fiscal deficit will remain structurally large, reaching US$1.85 trillion, or 5.8% of GDP, in FY2026 and staying near those levels before widening to more than US$3 trillion, or 6.7% of GDP, by 2036. While the primary deficit is expected to narrow modestly, rising interest costs on an expanding debt stock are driving the deterioration, with federal debt held by the public projected to approach 120% of GDP.
Why is this important: The persistence of large deficits implies sustained Treasury issuance, upward pressure on long-term yield premia, and a more constrained policy backdrop, reinforcing the likelihood of structurally higher yields over time.
Fixed Income Opportunity: SoftBank Group Corp. Credit-Linked Note Now Available
About SoftBank Group Corp.
SoftBank is a Japanese telecommunications, mobile, electricity, and software conglomerate founded in 1981 and listed on the Tokyo Stock Exchange. SoftBank Group is a globally diversified technology and investment conglomerate with a vast portfolio of subsidiaries and strategic holdings. The company is widely recognised for its long-term vision, large-scale capital deployment, and focus on transformative technologies.- Its operations span multiple sectors, including:
- Telecommunications
- Investment Management (Vision Funds, one of the world’s largest technology investment funds)
- Semiconductors
- Internet & Digital Services
- Robotics
This breadth of diversification provides SoftBank with multiple recurring revenue streams and contributes to the group’s long-term stability, key attributes for investors assessing creditworthiness.
Example: How Fixed Income Works
A company issues a debt security with the following terms:
Term: 5 years
Coupon: 6.15% p.a., paid semi-annually
Issue Price: $100
Minimum Investment: $10,000 AUD
Investor Scenario: Semi-Annual Payments
Sarah may choose to receive income every 6 months. She receives $3,075 every 6 months (6.15% × $100,000 / 2). Over 5 years, she also receives $30,750 in total income, plus her $100,000 principal at maturity (subject to no credit event or early redemption).
If she sells before maturity, she may receive more or less than $100,000 depending on market conditions.
Risks
This is an overview of the main risks associated with this investment. Further (and more complete) details of the main risks associated with this security are set out in the PDS.- 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 credit worthiness 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 that 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.
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*Data accurate as at 27.02.2026
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.