Richer After The RBA Minutes

ACGBs are 3-5bp richer after the release of the June RBA Minutes but remain weaker on the day (YM +1.0 & XM -4.0). The 3/10 cash curve is 2bp steeper after the Minutes.

• During the policy decision discussion, the board members acknowledged that inflation had peaked but remained above target, and it was projected to return to the top of the target range by mid-2025.
• The board deliberated between two options: raising the cash rate by 25bp or keeping it unchanged. The case for a rate hike focused on the risk that inflation would take longer than expected to return to target.
• The case for keeping the cash rate unchanged focused on the economic slowdown, potential sharp decline due to increased interest rates, weak consumption growth, falling real disposable incomes, and the tightening of financial conditions.
• Cash ACGBs are 4-6bp richer after the release of the Minutes but remain flat to 4bp cheaper on the day with the curve steeper.
• Swaps are 4-6bp lower after the Minutes, sitting flat to 3bp higher on the day.
• Bills strip twist steepens with pricing +4 to -2.
• RBA dated OIS pricing is 1-7bp softer after the Minutes release with September leading.