CBA Recommend Received AU/U.S. 1Y1Y Position

Late on Monday CBA recommended adding a received Australia 1Y1Y swap position vs. the U.S. equivalent, entering at 41bp, with a stop set at 52bp and a target of 15bp. The have noted that their internal data suggests that Australian spending is starting to peak, house prices in the major capital cities are already dipping and bank lending is slowing. They have reiterated their view that RBA pricing is overly aggressive when compared to the market view on the Fed (largely owing to a lack of liquidity, data and the absence of natural receiver side interest). They also suggest that offshore accounts are looking for signs in the data that would validate CBA’s view.