NAB Morning Call How long will the fury last?
Mar 2, 2026
Rodrigo Catril, NAB markets economist who analyzes energy prices, bond yields and central bank responses. He breaks down the oil and European gas shock from Operation Epic Fury. He explains the bond-market about-turn, shifting rate-cut expectations. He outlines scenarios from a brief disruption to prolonged stagflation and flags political and shipping risks shaping market outcomes.
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Energy Shock Propelled A Broad Market Repricing
- Energy markets drove immediate moves: Brent rose ~5.7% above $77 and European gas spiked over 50% after a drone attack on Qatari LNG facilities.
- Rodrigo Catril links those moves to broad market repricing including higher 10-year Treasury yields and a stronger US dollar as investors seek shelter.
Bond Markets Repriced Rate Cut Expectations
- Markets executed a rapid rates U-turn: 10-year US Treasury yields fell below 3.92% then repriced back up to ~4.05%, and Fed rate-cut bets trimmed by ~10bp since Friday.
- Rodrigo explains this reflects uncertainty over how long the energy disruption will last and its inflation-growth trade-off.
Stagflation Risk Forces Central Banks To Wait
- The core dilemma is stagflation: higher-for-longer energy raises inflation while weighing on growth, complicating central bank policy choices.
- Rodrigo says central banks will likely wait for clarity rather than tighten into slowing growth plus rising inflation.