Market Information Tuesday 05 May 2026

Australia’s Reserve Bank of Australia (RBA) raised its policy rate by 25 basis points to 4.35% on Tuesday, matching its December 2024 peak and marking its third consecutive increase. Eight of nine board members voted in favour. The RBA cited Middle East conflict as a key driver of elevated fuel and commodity prices, pushing consumer price inflation to 4.09% in the first quarter of 2026. The bank signalled further hikes ahead, with forecasts pencilling in a policy rate of 4.7% by December 2026, while economic growth for 2026 was revised down to 1.3%.

Euro area manufacturing activity picked up in April, with the S&P Global Eurozone Manufacturing Purchasing Managers’ Index (PMI) rising to 52.2 from 51.6 in March. However, the headline figure was distorted by stockpiling behaviour, as firms rushed to build raw material inventories amid Middle East war-related supply concerns. Business confidence, measured by the future output index, fell to 55.4, its lowest in 17 months. Input costs surged, with the input prices index jumping from 68.9 to 77.0, reinforcing expectations of European Central Bank (ECB) rate hikes later this year.

The European Union is preparing to defend its interests if US President Donald Trump follows through on his threat to raise tariffs on EU cars and trucks from 15% to 25%. Trump claims the EU has not upheld the agreement, reached in July last year, under which the US imposed a 15% general import tariff on EU goods while Europe scrapped most duties on American industrial and agricultural products. The EU states dialogue remains its preferred approach, but all options are on the table if the US deviates from agreed terms. Ratification of the deal by the European Parliament is expected in June.

The 6M Euribor increased with 6 basis points to 2.52% compared to previous business day. The 10Y Swap increased with 6 basis points to 3.13% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.