The big picture
The RBA's move to a demand-driven reserves regime marks the end of an era of abundant liquidity, as the central bank shrinks its balance sheet and discontinues the open repo facility that was designed for a scarcer reserves environment. This shift towards a leaner operational framework is echoed by the SNB, where a board member's willingness to cut rates below zero signals a potential return to negative rates, and by the CBRT's resumption of one-week repo auctions after a suspension. The Riksbank's hold, despite beating its own growth forecast, adds to the picture of central banks recalibrating their policy stances as supply shocks fade.
On the watchlist
- 2026-09-01: RBA's first full-allotment OMO under the new demand-driven regime, watch the spread to the cash rate target against the benchmark of ten basis points.
- 2026-09-15: SNB monetary policy assessment, watch for any change in the policy rate from zero toward negative territory.
- 2026-09-30: CBRT's first one-week repo auction after resumption, watch the bid-to-cover ratio for signs of funding stress.
- 2026-08-31: Treasury's deadline for reviewing updated TAAPS auction specs, watch for the final implementation date of the XML changes.
Top stories
Why it matters The RBA's shift to demand-driven reserves with a ten basis point OMO spread will lower banks' cost of holding reserves, potentially easing short-term rates and tightening the transmission of monetary policy.
The Reserve Bank of Australia is transitioning to a demand-driven liquidity regime, with banks' expected ample reserves declining to $70bn from $100bn in 2024. The open repo facility, introduced in 2013 when reserves were scarce, will be discontinued from early next year as usage has fallen below $5bn. The RBA will supply reserves through full-allotment open market operations at a spread of 10bp over the cash rate target. This shift reduces the RBA's balance sheet footprint and may lower the cost of maintaining reserves for banks, potentially influencing short-term interest rates and the transmission of monetary policy.
- Reserves injected during pandemic $500bn
- Annual reserve drain from bond maturities $20bn
- Estimated reserves needed for open repo $20bn
- Reserves supply in 2013 A$1bn
Why it matters A move to negative rates by the SNB would pressure the franc and could force euro-area bond markets to reprice Swiss assets, given the SNB's policy rate is already at zero.
Swiss National Bank board member Petra Tschudin said the central bank would cut rates below zero if necessary, citing record-low inflation driven by well-anchored expectations and the small weight of oil products in the CPI at 2%. She criticized forward guidance, noting the SNB does not publish rate forecasts, and its conditional inflation forecast assumes an unchanged policy rate. With the policy rate currently at 0% and the inflation target range of 2%, this signals a potential shift toward negative rates, which would pressure the franc and influence bond markets.
Why it matters The KfW analysis exposes AI equity valuations to a sharp correction if productivity gains fail to materialize, a risk that directly threatens growth-focused portfolios.
KfW Research's analysis of the global AI investment boom finds that current investment levels can be justified under realistic productivity assumptions, but warns of billions in losses if gains fail to materialize. The model compares the present value of future AI earnings with aggregate investment, highlighting downside risks from lower growth, delayed adoption, or higher capital costs. For investors, this underscores the fragility of AI-related equity valuations, which could correct sharply if productivity data disappoints.
Why it matters The CBRT's resumption of one-week repo auctions eases lira funding conditions, potentially stabilizing short-term rates and supporting the lira, which matters for EM fixed income positions.
The Central Bank of the Republic of Türkiye announced it will resume one-week repo auctions that were suspended on March 1, 2026, as part of its Turkish Lira liquidity management measures. This move signals a change in the central bank's liquidity operations, potentially easing funding conditions for banks and influencing short-term lira interest rates. The resumption may also reflect a shift in the CBRT's approach to managing market liquidity, with implications for the lira's exchange rate and the bank's policy stance.
Meanwhile, GDP growth in the second quarter was revised up to 0.3% quarter-on-quarter from the flash estimate, with exports growing 2% but equipment investment falling −1.4%. The higher deficit, driven by increased spending, may pressure Germany's fiscal position and complicate future budget negotiations, potentially affecting bond issuance and yields. The upward revision to growth, however, provides some offsetting positive news for tax revenues.
- GDP growth, y/y 1%
- Savings rate 9.6%
- State revenue €1.07trn
- State expenditure €1.14trn
Also today
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The 10-year government bond yield stood at 1.71%, with a spread of over half a percentage point over the 1-year. Despite lower turnover, stable short-term rates like DR007 at 1.43% suggest liquidity remains ample, supporting fiscal expansion.
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This shift turns Nigeria into a net product exporter, altering regional supply balances and pressuring European refiners' margins. The data, from Vortexa via EIA, is buried in the agency's weekly petroleum status report; a sustained export level above half a million barrels per day for two more quarters would confirm the structural change.
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Olga Shishlyannikova, director of the investment financial intermediaries department at the Bank of Russia, defended the Russian stock market against the 'casino' label, citing halved misselling complaints since 2023 and growth in long-term savings.
Deep dives
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The Riksbank left the policy rate unchanged at 1.75% in August 2026, despite inflation running above target and the economy growing faster than forecast. The decision reflects a judgment that the Middle East conflict's impact on prices and activity has so far been milder than feared, with temporary factors—such as oil inventories and China's reduced imports—dampening supply pressures. The measured CPIF inflation rate is being reduced by as much as one and a half percentage points by temporary tax cuts, masking the underlying momentum.
Headline CPIF inflation stood at 2.2% in July, while CPIF excluding energy was 1.6%, but the three-month annualised rate for the latter reached 4.5 pct annualized, and the monthly increase excluding energy was 0.6%. The board acknowledged that the probability of a rate hike this year remains, with risks to inflation skewed to the upside, particularly if the war escalates or if the upturn in short-term inflation proves more lasting.
The Executive Board's discussion highlighted an unusually expansionary fiscal policy that could fuel demand-driven inflation, and the neutral rate path is seen adjusting towards its midpoint. For bond investors, the hold at 1.75% and the hawkish tilt imply that Swedish government yields may stay elevated, with the krona sensitive to any shift in hike expectations. The next step, as one member put it, is to reduce the sail area, but the timing remains uncertain.
- CPIF inflation, y/y 2.2%
- CPIF inflation excluding energy, y/y 1.6%
- Inflation including energy, m/m 0.7%
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Russian retail investors poured a record ₽1.1 into brokerage accounts in Q2 2026, lifting their total portfolios to ₽13.6, up nearly a quarter year on year. The inflow was driven by falling deposit rates, which made equities and bonds relatively more attractive. However, the composition of retail portfolios shifted markedly: the share of resident bonds rose to 37%, while the share of Russian equities fell to 20%, its lowest level in years. This rotation reflects both a search for yield in a declining rate environment and growing risk aversion amid budget concerns.
The shift into bonds was broad-based, with the share of resident funds (mutual funds) also climbing to 22%. At the same time, the number of qualified retail investors surpassed 1 mln persons, and the average brokerage account size (excluding small accounts) reached 2,3 млн руб.. Despite the inflows, trading activity weakened: total turnover in the interest of retail clients fell to 12 трлн руб., down roughly a tenth quarter on quarter and a fifth year on year. This suggests that investors are buying and holding rather than actively trading.
The Bank of Russia's data, based on broker reports and exchange statistics, also shows that technical defaults by 29 ед. issuers dampened appetite for high-yield bonds. Meanwhile, the maximum deposit rate at the ten largest banks declined to 12.76% from the end of Q1 level, reinforcing the shift toward market instruments. For the Ministry of Finance, the sustained retail demand for OFZ bonds supports borrowing costs, but rising long-term yields due to budget risks could offset this support, making future auctions more expensive.
- Retail investors (excluding small accounts) 5,9 mln persons (2026-Q1 5.8 mln persons)
- Количество клиентов без учета небольших счетов 5,9 млн лиц (2026-Q1 5.8 млн лиц)
- Уникальные клиенты на Московской Бирже 41,9 млн лиц
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The U.S. Treasury is upgrading its TAAPS auction processing system, which will change the structure of auction XML files and API fields. The 'Series' element will be removed, and many fields will be renamed, split, or added to provide more granular data on bidder types and auction details. Although the exact implementation date has not been finalized, consumers of auction files or API data are encouraged to review the updated specifications by the end of August 2026 and begin planning for necessary changes to their internal systems.
Most fields present in the TAAPS XML files and TreasuryDirect API can be mapped directly to new fields or derived from multiple new XML and API fields. However, it is important to note that, following the implementation of these changes, the 'Series' element will no longer be produced. The upgrade affects how Treasury auction data is structured and accessed, which is critical for market participants monitoring government debt issuance and auction outcomes. The removal of the 'Series' field and the addition of more granular bidder-type fields will change how auction results are analyzed, potentially impacting bond market transparency and trading strategies.
In brief
Rates & Bonds 30 items
Across thirty releases, central banks and statistical offices reported a mix of rates, inflation, and economic indicators. Notable figures include the Bundesbank's coupon rate 2.7%, the CBR's corporate loan growth 1.5%, and the RBI's additional subscription option ₹2,000 crore. The Fed and BIS published working papers on conditional pricing kernels and balance sheet shrinkage, respectively. Japan's Ministry of Finance planned an issuance amount ¥250bn, while Statistics Finland reported industrial producer prices 6.9% and MAS core inflation 2%.
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Equities & Sectors 2 items
Two releases cover equities and sectors: Destatis reported new orders 6% and Algeria's COSOB reported the number of transactions 2,268.
Commodities & Energy 2 items
Two releases cover commodities and energy: USDA's corn dough 86% and Japan's METI regional infrastructure SS candidates 50.
FX & Emerging Markets 7 items
Across seven releases, central banks and statistical offices reported on trade, payments, and financial systems. Eurostat reported exports €680bn, the NBK daily cashless transactions 39 mn, and the RBA the AUD/JPY rate 113.92 local ccy per usd. The Central Bank of Egypt approved rules for a digital financial identity system, while the Central Bank of the Dominican Republic published an article on instant payments. Haiti's central bank reported total assets 719,096,417 HTG thousand.
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Regulation & Structure 13 items
Across thirteen releases, regulators and supervisors focused on digital finance, AML/CFT, and risk management. The BoJ reported a GenAI adoption rate 90%, BaFin set a staff threshold for internal audit 10 employees, and HM Treasury announced a business rates cut for pubs 20%. The Central Bank of Türkiye set a FAST QR merchant payment limit ₺300k. Several authorities issued warnings or guidance on crypto-assets and AML/CFT, including BaFin, the National Bank of Slovakia, and the Isle of Man FSA.
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No direct market impact 28 items
Across twenty-eight releases, a wide range of statistical offices and ministries reported on economic and social indicators. Notable figures include KfW's export increase per euro invested €2.5, U.S. Department of Labor's back wages recovered $101.13k and civil money penalties $62.23k, Uzbekistan's food production UZS 75.2trn, and the Netherlands' change in legal expenses complaints 24.8%. The Faroe Islands reported an unemployment rate 0.9%, FRED Montana employment growth −1%, Greece overnight stays 1.4%, Kyrgyzstan total revenues KGS 166.76bn, Albania foreigners from America, Africa, Oceania 5.250 persons, and Finland land construction costs 5.2%. HMRC reported a qualifying income threshold £50k and pension input amount £5k.