Credit AgricoleAsia overnight Sentiment was steady as much of Asia returned from holidays. Firm US equities as investors started some dip buying last week helped support sentiment. Pledges by Chinese policymakers last week to help support the economy also continue to help sentiment. Investors remain cautious, however, ahead of a series of central bank meetings this week that will see financial conditions tighten. Indeed, the RBA lifted rates by modestly more than expected and signalled a strong focus getting inflation back down. S&P 500 futures and most Asian bourses were trading higher at the time of writing. In G10 FX, a hawkish RBA led to the AUD being to outperformer in the Asia session and the NZD the underperformer on AUD/NZD cross buying.CitiEuropean OpenAUD powered higher after RBA hiked rates by 25bps to 0.35% (consensus 15bps to 0.25%) which was coupled with a hawkish statement, driving a bear flattening of the curve as OIS rates jumped higher. Initial AUD jump has pared as markets digest the meeting details with rate hike pricing already aggressive and China growth, commodities likely to prove key to the FX performance. KRW shrugs off strong CPI print, as does the rates market with NDIRS little changed. Cash Treasuries are closed, though futures fell following weakness in AUD rates after RBA. Volumes across FX were running around 50% of normal owing to holidays across the region including Singapore, Japan and mainland China. With GBP returning from holiday, we can expect a more energetic session ahead with CAD set to pay attention to hawkish comments from BoC’s Rogers. Eurozone PPI will be notable for EUR while NZD sees labor data late in the day. BRL looks forward to industrial production data, and a slew of cross-regional FX remain on holiday.Only game in town. AUD surged as much as higher 1.4% higher after RBA hiked the cash rate by 25bps to 0.35% (Bloomberg consensus/Citi est. 15bps to 0.25%), an outcome not forecast by any contributors to the Bloomberg survey. RBA also confirming they will not reinvest maturing bonds bought as part of QE. AUD OIS rates jumped, with early 2023 rates rising over 20bps, to roughly bake in another RBA hike over the next year. 3y bond yields jumped 11bps as the curve bear flattened.–RBA statement had a hawkish lean overall as the bank lays out the path for a series of future rate increases, noting “The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead.” They also revise inflation forecasts sharply higher and state they will not be reinvesting maturing bond bought under the QE program.