RBC: Early Signs Of Slowing Demand In Australia?

In lieu of today’s data RBC write “while we wouldn’t place much weight on the negative monthly CPI given its unreliability lately in picking the direction of quarterly CPI, we think the unexpectedly weak household consumption growth despite a much lower savings rate in the GDP report justifies the strength in fixed income we’ve seen since the data crossed. The RBA isn’t done yet, but perhaps there are very welcome early signs here that rate hikes are starting to slow demand. Terminal market pricing has dropped circa 10bp from 4.30% to 4.20% post-report, mostly reflected lower Q4 ’23 and beyond rates. Pricing for next week’s meeting has dropped from ~97% of another 25bp hike to ~92%. We’d be happy to add to our existing March IB short if it fell below ~80%.”