Daily Flows
- NCD margins hit +50 yesterday with a domestic A3 name leading the charge. A2 margins remain around the +45 level.
- A2 bank paper has received flows over the last few days as we have helped clients rotate into new names, with buyers able to pick up attractive margins from client-to-client trades.
- TD levels in the longer-term retain their attractiveness, with an A1 bank at 5.10% yesterday.
4.35% Remains the Magic Number as RBA Adopts Slow but Steady Approach
- The RBA held the cash rate at 4.35% yesterday, adopting a more neutral approach to monetary policy than has been seen over the course of the hiking cycle.
- Several tweaks in language, including the removal of references to a “further increase in interest rates”, were viewed as dovish, and a sign the central bank’s hiking bias had softened.
- Governor Bullock declared the economy was “finely balanced”, with slowing GDP growth and inflation in the December quarter indicating a cooling in economic activity.
- The RBA’s expectations remain for inflation to return to within the target range of 2-3% by December 2025.
- Services inflation remains the RBA’s top priority as nominal wages growth drive price pressures.
- Markets have a first full cut priced in September, easing slightly from yesterday’s expectations of a July rate cut, which still very much remains on the table.