No Overt Slowing Signal From RBA Unwinds Pre-Decision Bid

Aussie bonds have pulled further away from best levels in the wake of the latest RBA decision, with no overt signal re: a pivot away from the Bank’s recent run of 50bp hikes and the RBA sounding a little more upbeat when it comes to wages.

• Still, there was enough in the statement to provide a relatively balanced outlook when it comes to the prospect of a 25/50bp hike in October (see earlier bullets), leaving OIS markets little changed when it comes to the pricing of the remainder of the current tightening cycle.
• RBA dated OIS still prices 34bp of tightening for the October decision, essentially unchanged on the week, while terminal rate pricing still sits around 3.85% (see earlier bullet for graphical and tabular depiction), with RBA Governor Lowe’s Thursday address and Q&A providing the next focal point for RBA watchers.
• ACGBs had squeezed higher pre-decision, perhaps on hawkish position covering/in anticipation of the signalling of slower rate hikes from the RBA, although this was not forthcoming (as we suggested in our preview), allowing YM & XM to print -0.5, with cash ACGBs flat to 1bp cheaper across the curve.
• A quick reminder that Wednesday’s domestic docket will bring the release of Q2 GDP data and A$800mn of ACGB Apr-33 supply.