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.