Off Sydney Highs

Aussie bonds have moved away from the levels printed on the back of the initial release of RBA Governor Lowe’s scripted remarks. The Governor subsequently stressed the ability to wait when it comes to rate hikes given broader uncertainties and a lack of worry re: runaway inflation. He noted that a rate hike in ’22 is plausible, as is a scenario whereby lift-off is 1 year+ down the line (while stressing that he “struggles” with the degree of tightening priced into markets at present). Lowe underscored the idea that the RBA’s goals are now in sight, while pointing to wage growth of 3% in ‘23, alongside the need for the Bank to monitor a wider array of wage metrics owing to the varied renumeration practices observed in tight labour markets. YM -3.5 & XM -2.5 at typing, with the 3- to 5-Year zone of the cash ACGB curve leading the weakness.