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STIR: RBA Dated OIS Shunts Softer After Q3 GDP Data

STIR
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RBA-dated OIS pricing is 5-13bps softer across 2025 meetings after today’s weaker-than-expected Q3 GDP data.

  • The Australian economy grew at 0.3% in Q3, 20bps lower than expected, and 0.8% y/y. Growth was propped up by public sector expenditure, up 1.4%, with government consumption and public investment both contributing to the Q3 result. The RBA forecasts year-ended GDP to print at 1.5% in Q4.
  • GDP per hour worked, a measure of productivity which the RBA watches closely, fell 0.5% q/q, from Q2’s 0.8% decline, and was -0.8% y/y. Real unit labour costs, meanwhile, rose 0.5% q/q, down from Q2’s 1.5%.
  • Nevertheless, a 25bp rate cut remains only partially priced until May, with the April meeting currently reflecting a 95% probability of a 25bp reduction.
  • Notably, market expectations for the May meeting have softened by around 20bps over the past two weeks. Previously, a full 25bps cut wasn’t anticipated until August, highlighting a significant shift in rate cut expectations. 

 

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RBA-dated OIS pricing is 5-13bps softer across 2025 meetings after today’s weaker-than-expected Q3 GDP data.

  • The Australian economy grew at 0.3% in Q3, 20bps lower than expected, and 0.8% y/y. Growth was propped up by public sector expenditure, up 1.4%, with government consumption and public investment both contributing to the Q3 result. The RBA forecasts year-ended GDP to print at 1.5% in Q4.
  • GDP per hour worked, a measure of productivity which the RBA watches closely, fell 0.5% q/q, from Q2’s 0.8% decline, and was -0.8% y/y. Real unit labour costs, meanwhile, rose 0.5% q/q, down from Q2’s 1.5%.
  • Nevertheless, a 25bp rate cut remains only partially priced until May, with the April meeting currently reflecting a 95% probability of a 25bp reduction.
  • Notably, market expectations for the May meeting have softened by around 20bps over the past two weeks. Previously, a full 25bps cut wasn’t anticipated until August, highlighting a significant shift in rate cut expectations. 

 

Keep reading...Show less