Cheaper After The Release Of October RBA Minutes

ACGBs (YM -9.0 & XM -7.5) are 1-3bps cheaper after the release of the RBA Minutes for the October meeting. To summarise:

• During their policy decision, RBA board members acknowledged that inflation remained well above the target and was expected to persist. However, they noted a turning point in the labour market and a slowdown in output growth.
• The options discussed were either raising the cash rate by 25bps or keeping it steady.
• Raising the rate was considered due to inflation concerns, particularly in core services and rising fuel prices. On the other hand, holding the rate was supported because recent rate increases needed time to impact economic data, and inflation had decreased since its peak.
• Members ultimately decided to maintain the cash rate, with a readiness to tighten policy further if necessary to reach the inflation target in due time.
• Cash ACGBs are 7-9bps cheaper on the day, with the AU-US 10-year yield differential unchanged higher at -19bps.
• Swap rates are 8-9bps higher on the day, with EFPs slightly wider.
• The bills strip has sharply bear-steepened, with pricing -4 to -12.
• RBA-dated OIS pricing is 2-9bps firmer across meetings, with terminal rate expectations 5bps firmer at 4.26%. By contrast, RBNZ dated OIS is 5-11bps softer after the CPI miss.