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.