- There was decent flow yesterday considering RBAs decision was pending.
- In response to the hike, the yield curve has shifted: Cash Rate 4.10%, 3M 4.17%, 6M 4.42% and 1 Yr 4.34%.
- With a substantial increase across most short end terms, TD and NCD credit margins have had to reprice accordingly.
- Today, in the BBB space investors should expect to pick up 5.20% from 9 months onwards and 5.15% for ‘A’ rated names in the 1 year.
RBA Hikes for the Twelfth Time
- The RBA caught the market somewhat buy surprise yesterday, opting to hike a further 25bp taking the cash rate to 4.10%.
- Market pricing only had 5bp priced in ahead of the meeting while commentators and economists were split on the outcome.
- Driving the decision was the increasing upside risks to inflation after recent monthly CPI data and the minimum wager decision.
- As anticipated, the RBA retained their tightening bias which was expected which means the next couple of months will be very interesting.
- Currently the market is pricing a high probability that the RBA has one more hike left in this cycle.
- However the timing is very much up for debate.
- We will do a deep dive in the the latest decision from the RBA and what it means for the outlook in our Monthly Insights next week.
- Until then, you can see my live reaction to the decision and initial thoughts on the outlook via the link below: