Firmer In Wake Of SoMP

The space has moved away from Sydney lows on the back of the RBA SoMP, which saw the Bank note that depending on the trajectory of the economy at that time, the Board judges that its central economic scenario "could be consistent with the first increase in the cash rate being in 2024." It went on to note that "in some other plausible scenarios, wages growth and inflation could be higher than implied by the central scenario. If this were to eventuate, an increase in the cash rate in 2023 could be warranted. However, in the Board's view, the latest data and forecasts do not warrant an increase in the cash rate in 2022." As we noted earlier, this provided a slightly harder lean towards the RBA maintaining '24 as the timing of the first cash rate hike as its base case vs. Tuesday's communique, although there is clearly some optionality embedded. PBoC OMO liquidity dynamics are also providing some support. YM +8.0 & XM +7.5. 3- & 10-Year EFPs sit ~1bp wider on the day.