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Pressure As RBA Flags More Than One Hike In Coming Months

AUSSIE BONDS
HomepageBond Market NewsBulletMarketsFixed Income News

Aussie bonds are pressured as the RBA board delivered the expected 25bp hike, while pointing to further rate hikes in the months ahead (we place emphasis on the plural in future hikes). The Bank also tipped its hat to firm domestic demand resulting in more meaningful inflationary pressure, albeit while providing a sense of increased worry re: the health of some households (alongside some firmer language against the risks of a de-anchoring of inflation expectations, albeit as it reaffirmed that expectations remain well anchored at present). The Bank didn’t allude to its updated underlying inflation forecasts (which will be published on Friday), while it only expects headline inflation to return to the target range in ’25. Aussie bond futures breached their early session lows, with YM -16.0 & XM -13.0, a touch off their respective post-decision bases while wider cash ACGBS sit 9-15bp cheaper as the curve bear flattens, reflecting the risk of further hikes in the near-term. Terminal rate pricing has shifted above 3.90% to reflect this.

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Aussie bonds are pressured as the RBA board delivered the expected 25bp hike, while pointing to further rate hikes in the months ahead (we place emphasis on the plural in future hikes). The Bank also tipped its hat to firm domestic demand resulting in more meaningful inflationary pressure, albeit while providing a sense of increased worry re: the health of some households (alongside some firmer language against the risks of a de-anchoring of inflation expectations, albeit as it reaffirmed that expectations remain well anchored at present). The Bank didn’t allude to its updated underlying inflation forecasts (which will be published on Friday), while it only expects headline inflation to return to the target range in ’25. Aussie bond futures breached their early session lows, with YM -16.0 & XM -13.0, a touch off their respective post-decision bases while wider cash ACGBS sit 9-15bp cheaper as the curve bear flattens, reflecting the risk of further hikes in the near-term. Terminal rate pricing has shifted above 3.90% to reflect this.