Inflation Wording Adds Light Pressure To YM

While there is little in the way of fresh meaningful substance in the RBA's November meeting minutes, some light pressure has crept into the front end of the curve post-release.

• That likely comes on the back of the sentence which notes that "while a range of outcomes for global inflation in 2022 were possible, risks to inflation forecasts were tilted to the upside." The market seems to be of the opinion that this could put some pressure on the RBA to act ahead of its current forward guidance when it comes to the cash rate (an outcome the market has been more than fully pricing for some time already).
• Still, the Bank's overview on inflation is relatively well balanced, with the minutes reiterating the idea that "while the forecast for inflation was higher than previously, members noted that the outlook for inflation in Australia differed from that for many other advanced economies. Unlike a few major economies, the labour market participation rate in Australia had bounced back quickly. This flexibility in labour supply implied there would be less upward pressure on wages in Australia. In addition, the effect of global supply disruptions on inflation had been less pronounced in Australia than in other parts of the world, including in energy markets. And the starting points for inflation and wages growth were lower in Australia than in many other advanced economies. Members agreed that the distribution of possible outcomes for inflation had widened." The minutes then fleshed out upside and downside scenarios for the path of inflation.
• YM made new session lows on the release, with the same holding true for XM. YM -6.0 & XM -6.5 as of typing, a touch above reaction lows.