Deutsche bank have shifted their cash...>

MARKET TALK: Deutsche bank have shifted their cash rate calls for RBA and RBNZ

and now see 75bps of easing by both,

bringing about cash rates of 0.25% by the end of this year. So why more easing?

Two reasons:

- The recent escalation of trade tensions have materially increased the

probabilities of a global recession. DB's US economists note that both their

preferred measures of US recession probabilities are currently signalling the

highest recession risks since the GFC, near 30%.

- Global bond yields. DB's US strategists expect US 10 year yields to continue

to decline toward, and very plausibly beyond, 1.50%. That will naturally

pressure long-term yields in Australia and New Zealand, as well. Consistent with

that global 'race to zero', Australia's 3-month-bills/10s curve has inverted in

recent days. With the exception of the pre-GFC 'high inflation' period, the RBA

has almost always responded to an inverted bills/10s curve with policy easing.