Bond Market Insights: Wed, 18 Mar 2026

Equity markets managed another modest grind higher overnight, S&P 500 up 0.3%, Nasdaq +0.5%, and Dow +0.1%. energy stayed well supported, healthcare lagged, and AI-linked names continued to attract flows. Micron rallied ahead of earnings, while Nvidia eased slightly after the GTC sugar rush.

Brent was back above USD103, driven by reports of further strikes on energy infrastructure in Iraq and the UAE.

Asia is facing the risk of oil price hikes and availability. Higher fuel costs hit pump prices immediately but any lengthy disruption to flows through the Strait of Hormuz raises the spectre of physical shortages, fiscal strain, power outages resulting in weaker growth. The lower income groups get hit hardest. Philippines is extending cash subsidies to jeepney drivers and farmers, Thailand has introduced diesel price caps, Vietnam has tapped the fuel price stabilisation fund and reduced fuel tariffs. Indonesia has increased fuel subsidies and used the state budget to absorb some of the price shocks.

US Treasuries were firmer into the Fed meeting, 10yr yield closing at 4.2%. The 20yr auction was solid. Curves flattened modestly with the belly leading the move.

No one really expects a move from the Fed today. The real focus is on the SEP (Summary of Economic Projections), the tone around inflation, and whether policymakers nudge up their estimate of neutral. Expectations are for the longer-run dot to move higher again, though still to remain below most estimates of nominal neutral.

US data overnight had little impact. Pending home sales rose 1.8% m/m in February against expectations for a decline, suggesting housing is still hanging in despite restrictive rates. Weekly ADP employment softened, with the four-week average slipping to +9k, consistent with a softer payrolls picture. The NY Fed services reading improved slightly but remained deeply negative.

US$ strength in this troubled time is a thing.. Japanese intervention is unlikely before the mid-160’s according to some pundits. The yen’s weakness is not disorderly enough.. yet.

Dissent withing the US is becoming more evident, with Joseph Kent, Director of the National Intelligence at the National Counterterrorism Center resigning. In his resignation letter he said “I cannot in good conscience support the ongoing war in Iran. Iran posed no imminent threat to our nation, and it is clear that we started this war due to pressure from Israel and its powerful American lobby”.

The RBA delivered the expected 25bp hike to 4.10%, but the details leaned less hawkish than the headline. The vote split was 5-4, with four members preferring to stay on hold for timing reasons rather than because inflation risks had vanished. Governor Bullock made clear those dissenters were not dovish so much as “hawkishly patient.”

The day ahead

·       NZ BOP, Q4 & consumer confidence, Q1

·       Japan trade balance, Feb

·       US Fed policy decision. Consensus expects no change, DB’s preview here. Also US PPI, Feb and final read for durable goods orders, Jan.

·       Canada: BoC policy decision. Consensus expects no change.

·       EU: Final read for Europe CPI, February.