Bond Selloff Cools but Equities Wobble as RBA Flags Hike Risk

After a sharp repricing in sovereign curves, the bond selloff has slowed — but the reprieve is fragile and equities have failed to rally with it, a signature of a market that is questioning terminal-rate assumptions rather than growth alone. The hawkish message from the Reserve Bank of Australia, where Deputy Governor Andrew Hauser warned that a rate hike remains on the table should inflation risks crystallise, matters well beyond Australasia. It is the clearest recent articulation from a G10 central bank that the disinflation trajectory is not assured and that the next policy move may be up, not down. For asset allocators, the implication is a higher discount rate for longer, compressing multiples in the most duration-sensitive corners of equity markets — high-multiple software, unprofitable growth and rate-proxy real estate. The wobble in stocks alongside stabilising yields suggests investors are beginning to price policy-error risk in both directions, a regime in which volatility premia should structurally widen.