VIEW: RBC: RBA Steps In To Defend YCT, More Policy Action Likely Next Week

RBC note that "today's RBA action was welcomed and builds on the change to the charge to borrow Apr-23s and Apr-24s (100bp from 25bp) announced on Monday. The yield on the Apr-24s fell from ~17bp pre-announcement to ~12bp currently. However, we expect the market to continue to test the RBA's resolve to hold rates unchanged until 2024 reflecting 3 factors that are unlikely to dissipate any time soon. Indeed, some may well intensify. These are 1) a more hawkish global central banking stance 2) increasing inflation concerns and 3) a faster reopening of NSW/VIC. Further RBA YCC operations will need to be backed up by some strong communication and jawboning from the RBA at the 2 Nov board meeting, 5 Nov SoMP and the Governor's 16 Nov ABE annual address for a still sceptical market."