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Thurs saw NAB hike its variable...........>

AUSTRALIA
AUSTRALIA: Thurs saw NAB hike its variable mortgage rates by 12-16bp, after the
bank implemented a hike in new borrower mortgage rates back in Nov, in the wake
of the remainder of the Big 4 hiking their broader mortgage rates in Aug/Sep.
 - NAB cited an increase in funding costs. 3-Month AU FRA/OIS spread has hit
levels not seen since July, pinched at both ends of the scale. Funding matters
persist, with the 3-Month BBSW fix seemingly more reluctant to pull back after
the turn of the year & RBA repo rates already printing above 2.10% in early '19.
Familiar issues dominate here, with large offshore demand, flat domestic fund
holdings, regulatory pressures for banks to hold more collateral at quarter end
& perhaps the size of the repo market all facilitating a move higher in the
short-term cost of funding in Australia. On the other end of the equation. The
global econ backdrop, eyes on AU econ fragility & a lower for longer RBA outlook
has pressured OIS. BBG's WIRP function notes that the OIS curve points to a 30%
chance of at least one 25bp cut from the RBA by year-end (based on the
interpolated methodology), after pricing in a near 50% chance of at least one
25bp hike from the RBA over the same horizon at the back end of November.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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