- With 6 month – 1 year reference rates climbing off the back of RBA meeting minutes, 1 year term deposits have cracked 5%.
- This level has not been offered since pre SVB bank collapse.
- Middle market investors have been quick to act as incoming data may shift market expectations and put downward pressure on longer term TDs.
- With the dust having settled from overseas liquidity concerns, demand for credit has returned. A number of bond maturities has seen a pick up in activity directed to new Semi-Govie and Govie maturities.
- NCD space continues to return to two way flows, with a bid tone still setting a rate of +40 for 3 months.
Lowe Addresses RBA Shakeup
- Governor Lowe appeared before the media yesterday to discuss the review into the RBA and the 51 recommendations that were handed down
- While it was interesting to listen to, we didn’t learn a whole lot more than was already released prior to his appearance.
- The market is now working through the ramification of some of the changes, should they all be adopted.
- One thing will be adjusting to the rhythm of 8 meetings a year as opposed to 11, given the current meeting schedule dovetails nicely with the data schedule and RBA releases such as the Quarterly Statement on Monetary policy
- New communication structure and frequencies will be something new and how the RBA maintains their core messaging through this shift will be something worth watching.
- There will also be some tweaking of their mandate which could result is a shift in the balance of focus between inflation and full employment, potentially impacting the driving forces behind the precise calibration of policy settings.
- Fortunately there will be plenty of time to assess these impending changes over the coming 12-18 months.