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AUSSIE BONDS: RBA Cuts But Is Already Cautious About Further Cuts

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM -1.0 & XM -1.5) are slightly weaker after the RBA Decision. To summarise the statement:

  • The RBA Board lowered the cash rate target to 4.10% as inflation continues to ease faster than expected. Underlying inflation fell to 3.2% in Q4 2023, with subdued private demand and easing wage pressures providing confidence in inflation’s downward trajectory. However, labour market data remains strong, suggesting ongoing tightness.
  • The Board remains cautious about further policy easing amid domestic and global uncertainties. While inflation is expected to return to target, risks remain.
  • The Board will continue to monitor economic conditions and remains committed to ensuring inflation sustainably reaches the 2–3% target range while maintaining price stability and full employment.
  • Cash US tsys are 1-4bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s holiday.
  • Cash ACGBs arelittle changed on the day with the AU-US 10-year yield differential at -5bps.
  • Swap rates are flat to 1bp higher on the day.
  • The bills strip little changed.
  • RBA-dated OIS pricing is slightly firmer after the RBA Decision across meetings today. 
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ACGBs (YM -1.0 & XM -1.5) are slightly weaker after the RBA Decision. To summarise the statement:

  • The RBA Board lowered the cash rate target to 4.10% as inflation continues to ease faster than expected. Underlying inflation fell to 3.2% in Q4 2023, with subdued private demand and easing wage pressures providing confidence in inflation’s downward trajectory. However, labour market data remains strong, suggesting ongoing tightness.
  • The Board remains cautious about further policy easing amid domestic and global uncertainties. While inflation is expected to return to target, risks remain.
  • The Board will continue to monitor economic conditions and remains committed to ensuring inflation sustainably reaches the 2–3% target range while maintaining price stability and full employment.
  • Cash US tsys are 1-4bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s holiday.
  • Cash ACGBs arelittle changed on the day with the AU-US 10-year yield differential at -5bps.
  • Swap rates are flat to 1bp higher on the day.
  • The bills strip little changed.
  • RBA-dated OIS pricing is slightly firmer after the RBA Decision across meetings today.