NAB Morning Call No end in sight
Mar 5, 2026
Markets moved to risk-off as rising Middle East tensions sent oil sharply higher. Bond yields jumped and central banks refocused on persistent inflation risks. Discussion covers Europe’s energy vulnerability, shipping attacks hitting supplies, and shifting expectations around US rate cuts. The show also flags softer Australian household spending and China’s lower growth target, then previews tonight’s US payrolls data.
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Markets Shift Sharply Into Risk Off
- Geopolitical tensions have flipped markets into a strong risk-off mode with the US dollar and bond yields rising.
- The Aussie fell 1.3% to 69.8 US cents, 10-year US futures rose to 4.85%, and oil (WTI/Brent) jumped toward $85 a barrel.
Europe Leads Bond Yield Repricing
- European bond markets led a surge in yields as investors repriced central bank paths toward fighting inflation.
- OIS now prices a cumulative 16bp of ECB hikes by year-end, a sharp reversal from ~6bp of cuts priced last week.
Central Banks Recenter On Inflation Risk
- Central bankers are publicly emphasising inflation risks from energy shocks rather than growth concerns right now.
- ECB's Nagel and FedBark flagged inflation as the primary focus amid Middle East-driven energy volatility.