Daily Flows
- In the BBB space, 4.50% for 6 months remains available, with two banks offering this level yesterday.
- With rate cuts on the horizon, many councils are locking in longer-dated TDs—one A-1/A rated name is still offering 4.50% for 5 years.
- The 3m vs 6m BBSW spread (3.62% vs 3.76%) continues to be steep, reflecting current front-end pricing dynamics and short-term funding conditions.
CPI Comes in Soft
- Australia’s May monthly CPI indicator undershot expectations, easing to 2.1% y/y (vs 2.3–2.4% consensus), the softest reading in the series so far.
- Core inflation also cooled: the trimmed mean dropped to 2.4% y/y, and CPI excluding volatile items and holiday travel fell to 2.7% y/y.
- The key drag was a sharp reversal in travel prices (-7% m/m), following seasonal strength around Easter. April’s surprise lift in new dwelling prices didn’t persist as price growth was flat in May.
- With this print, the full suite of key data is now in ahead of the RBA’s July 8 meeting.
- Markets now price a 93% chance of a rate cut in July, with 23bps priced for the next meeting (up from 21bps pre-CPI), and 43bps by August (up from 40bps).
