Analysts at Westpac explained that the RBA Board meeting should provide little surprises, with Tuesday’s speech by Governor Lowe and Friday’s Statement on Monetary Policy (SoMP) more important from a market perspective.
“We expect a lower growth forecast in the SoMP, but no shift in the inflation forecasts.”
“That will reinforce the current view that policy is on hold for the foreseeable future, although considering that a full hike is not expected until May 2019, risk rewards may be slightly biased toward a more hawkish interpretation of the RBA.”
“The AU-US 10yr bond spread has traded as we would expect. That is, AU bonds have outperformed during the UST-led sell-off. The spread is back around the -14/15bp level, which is where we see it averaging over the next several months, with any widening impulses being quickly faded.”