Daily Flows & Insights – RBA Minutes Today

Daily Flows

  • Current future interest rate expectations is reflected in the yield curve, with 6M BBSW the peak level at 4.65%.
  • 1 Year Aussie Swaps is at 4.60%, 2 year at 4.49% and 5 year at 4.37%.
  • With credit spreads on term deposits around 80-110 basis points over reference rates, market participants are capitalising on 1 year offerings now at 5.65% in the BBB space.
  • +50 for 3 month NCD remains the premium needed to attract.

RBA Minutes Today

  • With the U.S. on holidays, there was minimal data to trade off. Today at 11:30 the RBA Minutes is released for the most recent June surprise hike.
  • The markets will analyse the minutes diligently, looking for any indication as to whether consideration of active Quantitative Tightening was discussed.
  • There has been whispers of potential active selling by the RBA of the $330 Billion of bonds bought rather than letting them passively mature.
  • Markets will also be searching for an indication of how the decision to hike was concluded, was it a very close call or will it be similar arguments of a finely balanced decision as stated in May.
  • Currently, the markets are pricing in 30 basis points of hikes over the next two meetings.
  • Further volatility at the front end of the curve should be expected over the coming months.
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Curve Team
Jack Pedersen