Stronger Post-RBA, But Off Bests

After some initial volatility ACGBs sit 4-5bp richer post-RBA to be in the top of the session trading range at the time of writing (YM +9.0 & XM +6.5). While the RBA decision to leave the cash rate unchanged (for the first time since April 2022) was largely priced, the positive surprise for the market came via less hawkish guidance with the board stating that “some further tightening of policy may be needed”. The market will be tuned into the release of Q1 CPI on April 26 after the RBA board also signalled their belief that a range of data suggested inflation has peaked.

• Cash ACGBs are 3-5bp richer after the RBA decision to be 7-10bp stronger on the day.
• Swaps rates are 3-6bp lower post-RBA with the 3s10s curve steeper.
• Bills strip strengthens 5-8bp after the RBA decision with pricing +3 to +13 on the day with the whites leading.
• RBA-dated OIS pricing is 5-7bp softer across meetings after the RBA decision. The market had priced an 81% chance of a pause today ahead of the decision. May meeting pricing softened 5bp post-RBA, while year-end easing expectations remained unchanged at 23bp.