RBA To Be On Hold Today

• The US Treasury curve saw a modest bull flattening overnight, with two-year yields easing around 1.4bps and tens falling a further 3.6bps.
• Some observers have drawn parallels with 2018, when yields also retreated in the early stages of a government shutdown, though this time the moves are more contained.
• Australian bonds mirrored the global tone, with three-year futures slipping from 3.58% to 3.56% and tens easing from 4.39% to 4.33%.
• The RBA is widely expected to hold the cash rate at 3.60% today. Domestic data since August has been broadly in line with forecasts, or slightly stronger, supporting a ‘wait and see’ stance.
• Governor Bullock has indicated she is mindful of upside inflation risks but will likely defer any policy change until after the full quarterly CPI release in November. Markets currently assign roughly a 50% probability to a November move.