Slightly Cheaper, RBA Consulted On Tax Cut Changes, Aus. Day Holiday Tomorrow

ACGBs (YM -1.0 & XM -1.0) are cheaper but near Sydney session highs after today’s news flow surrounding the government’s proposed changes to the already-legislated tax cuts.

• In his speech at the National Press Club, PM Albanese said that the tax cut all taxpayers will receive was “broadly revenue neutral” and “won’t add to inflation pressures”. RBA Governor Bullock was consulted on the new tax package and apparently, she doesn’t expect any implications from the changes to RBA forecasts.
• ICYMI, In MNI Tax Cuts, Fiscal Policy Seen Complicating RBA's Job, our policy team speak to economic commentators. They say that the tax cuts will keep inflation high and are worth 50-75bp of monetary easing. Given the shift to people who are more likely to spend, the revised program may result in an upward revision to the RBA’s projections, which are scheduled on February 6. (See here)
• Cash ACGBs are flat to 1bp cheaper, with the AU-US 10-year yield differential 3bps tighter at +8bps.
• Swap rates are flat to 1bp higher.
• The bills strip is slightly cheaper, with pricing flat to -1.
• RBA-dated OIS pricing is little changed.
• Tomorrow, the local market is closed for Australia Day celebrations.
• QTC priced a new A$2.75b 4.75% Feb-34 fixed rate green bond, with a spread of 53.85bps over the ACGB 3.00% Nov-33.