Daily Flows & Insights – No Grinch Before Christmas as RBA Plays Nice

Daily Flows

  • Banks in the A2, A3, and unrated space continued to be on the hunt for funds yesterday with stellar rates of 5.20% (3 month) and 5.50% (6 month) for participants with funds to place.
  • NCD levels held steady at +55 from 3-6 months, tempting investors keen to lock in attractive outright rates.
  • Margins are expected to remain healthy for the rest of the week as ADIs are willing to pay up to position themselves well for the Christmas period.

No Grinch Before Christmas as RBA Plays Nice

  • The RBA held the cash rate steady at 4.35% yesterday as widely expected after its November hike, preferring to watch and wait on the back of November data indicating moderating goods inflation.
  • RBA Governor Michele Bullock indicated services inflation remains a point of concern, along with global geopolitical tensions and the state of the Chinese economy. She also highlighted uncertainty regarding the lags in effects of monetary policy as a key reason for holding off.
  • The statement accompanying yesterday’s decision retained hawkish undertones as the central bank pledged to remain resolute and do “what is necessary” to return inflation to target.
  • Markets, which at the start of the week saw a 65% chance of a first cut in December 2024, have now priced in a full cut in September 2024, signalling a belief the RBA has finished hiking and a cash rate of 4.35% will be enough to moderate inflation. Today’s GDP release will be one to keep an eye on, with economists expecting growth of 1.9% YoY, down from the last read of 2.1%. An unexpected print could change the equation.
Share this entry
Curve Team
Jack Pedersen