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Cheapen Slightly Further After The RBA Releases The May Meeting Minutes

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ACGBs (YM -4.0 & XM -3.0) have cheapened slightly after the RBA released the Minutes from its May Policy Meeting.

  • The Minutes highlight that recent data indicates rising inflation risks and the possibility of the CPI remaining above target for an extended period. While the RBA aims to avoid excessive fine-tuning of its policies, returning inflation to the target remains the highest priority, with limited tolerance for achieving this goal later than 2026.
  • The data also suggests that consumer spending will likely remain weak in 2024. Despite considering a rate hike, the RBA ultimately judged that keeping rates unchanged was a stronger case but remains open to future changes in the cash rate if necessary to achieve its inflation targets.
  • Cash ACGBs are 3bps cheaper on the day, with the AU-US 10-year yield differential at -18bps.
  • Swap rates are 3bps higher.
  • The bills strip is cheaper, with pricing -1 to -3.
  • Earlier, Westpac Consumer Confidence for May fell 0.3% m/m to 82.2.
  • RBA-dated OIS pricing is flat to 4bps firmer. A cumulative 10bps of easing is priced by year-end off an expected terminal rate of 4.34%.
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ACGBs (YM -4.0 & XM -3.0) have cheapened slightly after the RBA released the Minutes from its May Policy Meeting.

  • The Minutes highlight that recent data indicates rising inflation risks and the possibility of the CPI remaining above target for an extended period. While the RBA aims to avoid excessive fine-tuning of its policies, returning inflation to the target remains the highest priority, with limited tolerance for achieving this goal later than 2026.
  • The data also suggests that consumer spending will likely remain weak in 2024. Despite considering a rate hike, the RBA ultimately judged that keeping rates unchanged was a stronger case but remains open to future changes in the cash rate if necessary to achieve its inflation targets.
  • Cash ACGBs are 3bps cheaper on the day, with the AU-US 10-year yield differential at -18bps.
  • Swap rates are 3bps higher.
  • The bills strip is cheaper, with pricing -1 to -3.
  • Earlier, Westpac Consumer Confidence for May fell 0.3% m/m to 82.2.
  • RBA-dated OIS pricing is flat to 4bps firmer. A cumulative 10bps of easing is priced by year-end off an expected terminal rate of 4.34%.