Bond traders are certain of a cash rate increase by Christmas, implying a 50 per cent chance of a follow-up move.
Financial markets locked in a Reserve Bank cash rate increase by Christmas, tipping the sharemarket to the cusp of a correction, as the ramifications of the RBA’s tightening bias under new governor Michele Bullock sunk in.
Government bond yields jumped. The three-year rate was up seven basis points to a three-month high of 4.28 per cent. The 10-year yield added three basis points to hit 4.73 per cent. Global bond yields have been on a tear since May on expectations interest rates will stay higher for longer than previously thought.Bond traders ramped up their bets of a rate increase next Tuesday to 65 per cent, from a one-in-three chance before the CPI result.
Ophir Asset Management head of research Luke McMillan said: “I think this will be enough to push them over the edge to hike to 4.35 per cent next month.” A few days ago, bond traders had ascribed a one-in-three chance to the prospect of a rate cut by late next year.Fortlake Asset Management co-founder Christian Baylis said the RBA’s focus should be firmly set on returning inflation to its target by late 2025, noting that the timeline was originally mid-2025, before the central bank pushed it out further.
The RBA has kept the cash rate on hold at 4.1 per cent since July, waiting for the past 12 increases to take full effect, while safeguarding gains it has made in employment.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Australia news live: Albanese’s $2bn boost for critical minerals; RBA governor delivers inflation warningFollow live
Read more »
RBA Governor ‘isn’t ruling out’ cash rate hike before ChristmasThe new Reserve Bank of Australia Governor Michele Bullock has hinted that there may be a rate rise in November. “The board won’t hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation,” Ms Bullock told the 2023 Commonwealth Bank Global Markets Conference on Tuesday.
Read more »
RBA interest rates: Michele Bullock speech ‘assertive’ and ‘transparent’ according to economistsEconomists witnessed Reserve Bank governor Michele Bullock’s inflation fighting credentials first-hand on Tuesday night in her maiden speech in the top job.
Read more »
Australia inflation: Woolworths is watching housing pain as CPI sparks RBA interest rate rise fearsWoolworths CEO Brad Banducci says mortgagees and renters are hurting. But Wednesday’s inflation surprise leaves the RBA facing the prospect of lifting rates multiple times.
Read more »
'The board will not hesitate': RBA governor issues interest rate rise warningMichele Bullock has used her first speech as RBA governor to reiterate the bank&x27;s approach to the cash rate.
Read more »
‘Won’t hesitate’: RBA boss warns on rate hikeHome owners could face more rate hikes with the new Reserve Bank governor Michele Bullock warning she “will not hesitate” to increase increase again if inflation is not brought under further control.
Read more »