Daily Flows & Insights – 4.35% Remains the Magic Number as RBA Adopts Slow but Steady Approach

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.
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Curve Team
Josiah Binet