Westpac Looking To Enter 10-Year Break Even Position

Westpac note that their "economists expect that inflation expectations will not become untethered but will remain within the RBA's 2-3% target band and the labour market will hold at around full employment, meaning that the RBA only has to take the cash target back to neutral, not contractionary levels. Even so, the risks to this view are that inflation is higher rather than lower than current levels. So, with the dip below 2% in the 10-Year BEI, and nominal yields too expensive even within our expected range, we think owning some inflation risk is appropriate for now."

• As such, they look to buy ACGB (indexed) 2.50% 20 Sep '30 vs. selling ACGB 2.50% 21 May '30 at 1.95%, targeting 2.25% with a stop at 1.90%.