Cheaper Post-Lowe

The early Sydney weakness in Aussie bonds sees some extension in the wake of Governor Lowe reiterating the Bank’s willingness to combat inflation, with Lowe reaffirming that the Bank is not on a pre-set path, while noting that further monetary tightening is necessary (“How fast we increase interest rates, and how far we need to go, will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market.”). While there was nothing to shock in the initial release, Lowe’s address underscored the Bank’s recent hawkish turn, while warning that the Bank now looks for inflation to hit 7% in Q422 (Lowe had already flagged the potential for such a move in a previous address). YM & XM are now -9.0, while Bills run 7-12 ticks lower through the reds.