Slightly Cheaper After The Release Of RBA Minutes For June

ACGBs (YM -5.0 & XM -6.0) are holding cheaper, but little changed after the release of the June policy meeting minutes from the RBA. Key points:

• The RBA considered a rate hike but judged that keeping the rate unchanged was the stronger option.
• The path to achieving the CPI target and maintaining job levels is narrowing.
• Returning inflation to the target remains the RBA's highest priority.
• There is evidence that many households are experiencing financial stress.
• It is difficult to rule in or out future changes to the cash rate.
• The RBA is committed to doing whatever is necessary to return inflation to the target.
• The economic path is consistent with CPI returning to the target by 2026.
• Cash ACGBs are 4-6bps cheaper on the day, with the AU-US 10-year yield differential -1bps.
• Swap rates are higher, with the 3s10s curve steeper.
• Bills pricing is -2 to -5, with the strip steeper.
• RBA Dated OIS is slightly firmer after the release of the RBA Minutes. Pricing is currently 7-28bps firmer across meetings than pre-CPI levels. The market gives a 25bp hike in August a 46% chance. Terminal rate expectations are also dramatically firmer at 4.50% versus 4.37% before the CPI data.