OCBC Daily Treasury Outlook (8 Oct 2026)

Key arguments

• Fed minutes cited surging AI-related investments and geopolitical developments pushing up crude and refined fuel prices among inflationary pressures, with several participants noting core services ex-housing price increases remained elevated.
• Fed funds futures showed low probability of an October hike, with a 25bp hike by December largely intact; participants judged the labour market close to maximum employment but noted unusually low dynamism.
• The RBI raised its policy rate 25bp as expected; OCBC expects another 25bp hike this fiscal year, with risks skewed towards more rather than fewer hikes, consistent with a more hawkish RBI/ASEAN stance.
• Malaysia Budget 2027 is expected to show deficits of 3.6% and 3.4% of GDP for 2026 and 2027, but OCBC sees limited scope for consolidation and expects 3.6% in both years.

Corresponding source evidence

1. The 10-year and 30-year Treasury yields both reached their highest intraday levels since 2002 before closing lower. · 2002
2. In Asia, the RBI raised its policy rate by 25bp, as widely expected and in line with our conviction call that the RBI and ASEAN central banks are turning more hawkish.
3. We expect another 25bp hike from the RBI this fiscal year (ending March 2027), although the risks are skewed towards more rather than fewer rate hikes. · March 2027