- Off the back of the RBA pause Aussie Swaps sold off from 1-5 year by 5-10 basis points with the curve inverted from 6 mths/1 year out to 10 years.
- Today the highest offering is now 5.45% for 1 year term deposit in the BBB space.
- These levels will continue to face downward pressure, as interest rate markets reconsider future interest rate expectations.
- Expect 3 Month NCD margins to be 5-8 basis points lower.
RBA Holds Again
- Yesterday, the RBA pauses again keeping the cash rate at 4.10%.
- Looking at the statement, the RBA notes data is consistent with inflation returning to 2-3% target range over the forecast horizon and with output and employment continuing to grow.
- The Soft landing that has been touted so often seems like it may be achievable with current trends.
- Interest rate markets rallied as market participants are factoring in the end of the rate hike cycle.
- Inflation is on its way down, the stickiness of services inflation will be a key data point going forward.