Fortunately, the energy sector acted as a structural hedge. With Brent crude flirting with $104/bbl due to the ongoing US-Iran standoff in the Strait of Hormuz, Utilities and Energy provided the necessary points to prevent a complete technical breakdown. It’s a rotation, not a rout.
The Looming CPI Reality Check
All economic roads lead to Wednesday. The March CPI print is the first clean measure of the Middle East oil shock before the government’s fuel excise cut took effect on April 1. Market expectations are already shifting. We’ve seen consumer inflation expectations jump to 5.9%, and the Big Four banks are now in a rare consensus for a May rate hike to 4.35%.
The ASX 30 Day Interbank Cash Rate Futures are currently pricing a 72% probability of a 25bps hike. If CPI prints a 4 or higher on the headline, the RBA’s hand is effectively forced. We’re in a regime where good economic data is bad for equities because it keeps the RBA hawkish.
10-Year Yields at 5% Gravity
The 10-year government bond yield is currently the primary ceiling for the ASX 200. Trading stubbornly near multi-decade highs of 4.96%, it makes the equity risk premium hard to justify for growth-sensitive sectors. I believe we’re in “market purgatory” until yields find a directional bias.
Strong domestic PMI data—showing both manufacturing and services returning to expansion—is a double-edged sword. It shows resilience, but it also gives the RBA the “all clear” to tighten further without fear of an immediate growth collapse.
Australian 10-Year Nearing 5%
