Daily Flows

• The short end of the curve has dipped slightly, with 1- to 3-month BBSW now trading below 4.30%.
• The gap between the 3- and 6-month tenors has narrowed to just 7 basis points. Market movements like this suggest increased confidence that the RBA will cut rates in February.
• Friday’s standout term deposit rate was 4.95% for 12 months, an offering that looks even more attractive given the recent drop in 1-year reference rates.

The Week Ahead

• Tomorrow brings the highly anticipated Q4 CPI print. Markets are forecasting a 0.3% QoQ headline read and a 0.6% QoQ trimmed mean.
• This CPI data will be pivotal in shaping expectations for the February RBA meeting, as it is the final major domestic economic release before the decision.
• Currently, money markets are pricing in a 79% chance of an RBA rate cut.
• In the US, the Federal Reserve is set to announce its interest rate decision early Thursday morning, with the outlook becoming increasingly volatile under the new presidential administration.
• This week will also see a flurry of European inflation and GDP data releases, providing further insights into the global economic landscape.