RBA on Hold
- NAB business confidence fell 1pt to -15 in October, its eighth consecutive month in negative territory and well below its long-run average, while business conditions eased 1pt to -2.
- Consumer sentiment also weakened, with the Westpac-MI index falling 2.7% to 78.2 in November, a four-year low, led by a sharp deterioration in the near-term economic outlook. The RBA is now expected to remain on hold, with 1 bps priced for December and easing expected into next year, although the Bank is likely to wait for clear signs of moderating inflation before cutting.
- US CPI rose 0.4% m/m in October, above the 0.3% consensus, while core CPI rose 0.3% m/m against expectations of 0.2%, adding to concerns their economy may be overheating.
- The stronger inflation print and hawkish comments from Fed officials lifted hike expectations ahead of the December meeting, with the 2yr yield rising 16bps to 4.73% and the 10yr up 10bps to 4.98%. The US OIS curve is now pricing 28bps of hikes by December.
