Holding Cheaper After Lack Of Overt Dovish RBA Pivot

After some early two-way price action it was the lack of an overt dovish pivot in the RBA’s post-meeting statement guidance paragraph that accompanied the widely expected 25bp hike, along with the market adjustment given that 21bp of tightening was priced pre-meeting, that applied some pressure to ACGBs, leaving the space cheaper at the bell.

• YM settled -7.0, while XM was -3.0, with wider cash ACGBs were 2-9bp cheaper, as the curve bear flattened.
• Bills were 6-10bp cheaper through the reds, while RBA terminal rate pricing adjusted 10bp or so higher vs. pre-meeting levels, hovering just above 3.65%, with 12bp or so of tightening priced for the Bank’s Feb ’23 meeting.
• The RBA’s statement reaffirmed the recent messaging in that more tightening is expected, albeit with the Bank in a data-dependent stance and not operating on a pre-set course. The Bank also sounded a little more wary re: the health of the global economy and re: the outlook for household consumption.
• Tomorrow’s local docket will be headlined by Q3 GDP data (after we saw a surprise current account deficit and a smaller than expected detraction for GDP from net exports in today’s releases) and A$900mn of ACGB Nov-33 supply.