Firmer Post-RBA

Aussie bonds have firmed in the wake of the RBA decision, with the continued inclusion of the willingness to be patient in the Bank’s forward guidance passage re: interest rates providing a bit of a surprise/dovish tinge to the statement. Note that the Bank marked its expectations higher when it comes to the peak of underlying inflation in the near-term and the underlying inflation profile for ’23, but continues to expect the wage growth dynamic to be the limiting factor when it comes to inflationary pressures (although it did highlight several well-documented risks/uncertainties surrounding its view).

• The Bank seemingly failed to make any meaningful adjustment when it comes to GDP growth expectations, while it marked its unemployment forecasts lower in the wake of the recently observed dynamic in that space.
• YM & XM +0.5 at typing, a little shy of the initial reaction highs witnessed in both contracts.
• The Bank also noted that it will “consider the issue of the reinvestment of the proceeds of future bond maturities at its meeting in May.”
• Bills have pushed higher in the wake of the decision, with the whites now sitting 3-9 ticks higher on the day. The reds have lagged a little, and last sit -1 to +3, with a little of the hawkishness wound out of the front end of the strip (the whites).