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AUSSIE BONDS: Slightly Cheaper After RBA Delivers Expected ‘No-Change’ Decision

AUSSIE BONDS
RegionGlobalBulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM -5.0 & XM -1.0) are 1-2bps cheaper after the RBA delivered the widely expected ‘no change’ decision. To summarise the accompanying statement:

  • The latest forecasts mirror those from August, highlighting persistent underlying inflation due to strong demand and tight labour markets. Growth is weak, wage pressures have eased, and global uncertainties remain high.
  • The RBA Board prioritises returning inflation to target, emphasising vigilance against upside risks. Despite lower headline inflation, underlying inflation remains high. Policy will stay restrictive until inflation trends sustainably toward the target, with decisions guided by evolving economic data and risks.
  • Cash ACGBs are flat to 4bps cheaper, with a flattening bias. The AU-US 10-year yield differential at +27bps, near the upper limit of the +/-30bps range maintained since November 2022.
  • Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session, with a steepening bias, ahead of today’s US Presidential Election.
  • Swap rates are 1bp higher to 1bp lower, with EFPs ~1bp tighter and the 3s10s curve flatter.
  • The bills strip has bear-steepened, with pricing flat to -6.
  • RBA-dated OIS pricing is 1-5bps firmer after the RBA decision and 1-9bps firmer than last Wednesday’s pre-CPI levels. The market had assigned an 8% probability to a 25bp rate cut at today’s meeting.
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ACGBs (YM -5.0 & XM -1.0) are 1-2bps cheaper after the RBA delivered the widely expected ‘no change’ decision. To summarise the accompanying statement:

  • The latest forecasts mirror those from August, highlighting persistent underlying inflation due to strong demand and tight labour markets. Growth is weak, wage pressures have eased, and global uncertainties remain high.
  • The RBA Board prioritises returning inflation to target, emphasising vigilance against upside risks. Despite lower headline inflation, underlying inflation remains high. Policy will stay restrictive until inflation trends sustainably toward the target, with decisions guided by evolving economic data and risks.
  • Cash ACGBs are flat to 4bps cheaper, with a flattening bias. The AU-US 10-year yield differential at +27bps, near the upper limit of the +/-30bps range maintained since November 2022.
  • Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session, with a steepening bias, ahead of today’s US Presidential Election.
  • Swap rates are 1bp higher to 1bp lower, with EFPs ~1bp tighter and the 3s10s curve flatter.
  • The bills strip has bear-steepened, with pricing flat to -6.
  • RBA-dated OIS pricing is 1-5bps firmer after the RBA decision and 1-9bps firmer than last Wednesday’s pre-CPI levels. The market had assigned an 8% probability to a 25bp rate cut at today’s meeting.