Slightly Cheaper After the Release Of The Dec. RBA Minutes

ACGBs (YM -5.0 & XM -6.5) are 1-2bps cheaper after the release of the RBA Minutes for the December meeting. The Board decided to leave the cash rate target unchanged at 4.35 per cent at that meeting. To summarise:

• Members, assessing the policy decision, acknowledged economic data aligned with expectations. Inflation, though high, was declining, while wages growth hit 4% earlier than anticipated.
• Output remained below trend, and the labour market, though tight, was gradually easing. Financial stability wasn't seen as a constraint. Members observed eased expectations for global policy rates, yet Australia's remained stable.
• Considering a 25bp rate hike, some highlighted prolonged above-target inflation driven by domestic demand. However, the majority opted to keep rates steady, citing weak consumption, potential unemployment rise, and the need for more data.
• The Board remains vigilant in achieving the inflation target.
• Cash ACGBs are flat to 1bp cheaper after the release and 4-5bps cheaper on the day. The AU-US 10-year yield differential is 2bps wider at +17bps.
• Swap rates are 1-2bps higher after the Minutes and 4-5bps higher on the day.
• The bills strip has maintained its bear-steepening after the release, with pricing -2 to -6.
• RBA-dated OIS pricing is slightly firmer after the Minutes and 1-4bps firmer on the day.