RBA prepared to drop interest rates?

[tess85]

sorry boz, link doesn't work!! but I see what you mean by long term now.

 

[boz]

markets are now expecting over 50% chance of a RBA 0.25 rate cut by year end. I think it will come soon and probably even more then a quarter point as banks wouldn't pass in all of it

 

[Timeshift]

markets are now expecting over 50% chance of a RBA 0.25 rate cut by year end. I think it will come soon and probably even more then a quarter point as banks wouldn't pass in all of it

They will pass it on in full, to the savers that is

 

[Bigtone]

The betfair market has no change at the June meeting at 1.02 which means for every $100 u win 2 bucks. It has been very accurate guide in predicting moevements in the market so lock in no change for June

 

[Rolf Latham]

the 30 day futures to jan tend to suggest flat if anything I heard

ta
rolf

 

[Intrinsic_Value]

markets are now expecting over 50% chance of a RBA 0.25 rate cut by year end. I think it will come soon and probably even more then a quarter point as banks wouldn't pass in all of it

boz all of the intitutional briefings i am receiving are pointing to a pause, serveral months and maybe longer, but not to cuts.
This includes Goldmans, Citi, Morgan Stanley, UBS.

Consider also the impact of a drop in the AU$ on import inflation (my thought process not the institutions).

Consider also the latest wage growth figures, employment data (together with the RBA concern about tight labour markets).

Consider kevin's rudd's cigarrett tax, which will have an inflationary impact that i highlighted in another post.

If inflation looks like topping the 3% band, their hands are tied, unless there is good forward data indications that australia will go into recession.

 

[boz]

30 days cash market at the end of the year point to interest rates that are closer to a 4,25% rate then to a 4.5%. So Market are start to price in more a cut then flat. Then you get opinions that are a bit of a different thing that market expectations. For June2 decision market are pricing a no move.
Probably the weak AU$ (at 81 cents right now) is also becasue of the increasing rate cut expectations, even the very high car sales data today didn't help the AU$ and markets

 

[boz]

Just realise the age post the same news I posted here. This time they have been good and beat me with the timing

Earlier this month the futures market had factored in another interest rate rise, maybe even two, before the end of the year. But a cut is now seen as more likely.

The market shows the expected average level for the cash rate, set by the Reserve Bank of Australia (RBA), heading down from its current 4.5 per cent to a low point of 4.35 per cent though October.

That implies a better-than-even chance of an interest rate cut to 4.25 per cent by that time.

The market grudgingly allows that cash might be higher in June 2011 than it is now, but the odds of that - a move to 4.75 per cent - are only slightly better than 50-50, according to the market.

This outlook is radically different from what was predicted just three weeks ago.
...

 

[urbanprospector]

30 days cash market at the end of the year point to interest rates that are closer to a 4,25% rate then to a 4.5%. So Market are start to price in more a cut then flat. Then you get opinions that are a bit of a different thing that market expectations. For June2 decision market are pricing a no move.
Probably the weak AU$ (at 81 cents right now) is also becasue of the increasing rate cut expectations, even the very high car sales data today didn't help the AU$ and markets

that's because those sales been subidised by the tax payer .

the weak dollar is a flight to safety .ours is classed as a risky currency as we dependent on commodities and global growth

 

[MrCrumbpacker]

There doesn't seem to be expectation of a rate drop in the IB expectation curve graph?
http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf

I would recommend looking at the 90 bank bill futures for a better indication of direction, much more liquid benchmark.

You can watch the day or night session on futuresource.com, go to quotes, by exchange, SFE, bank accepted bills.

or here http://www.sfe.com.au/content/prices/rt****fIR.html

 

[JIT]

I would recommend looking at the 90 bank bill futures for a better indication of direction, much more liquid benchmark.

You can watch the day or night session on futuresource.com, go to quotes, by exchange, SFE, bank accepted bills.

or here http://www.sfe.com.au/content/prices/rt****fIR.html

Hi MrCrumbpacker,

The day session:
http://futuresource.quote.com/quotes/quotes.jsp?s=IR-SFE&t=Future

The night session:
http://futuresource.quote.com/quotes/quotes.jsp?s=IR-SFE=1&t=Future

Can you explain how you interpret these figures with respect to the way interest rates may change in the future?

Thanks!

 

[MrCrumbpacker]

Hello Jit,

contract = 100 less expected interest rate as traded, so 95.45 would give IR 4.55, you can plot a yeild curve from these a little further out.

It is the STIR contract traders use for the short end curve. Currently implies a rate around 5.25% Dec11 interbank.

 

[JIT]

Hello Jit,

contract = 100 less expected interest rate as traded, so 95.45 would give IR 4.55, you can plot a yeild curve from these a little further out.

It is the STIR contract traders use for the short end curve. Currently implies a rate around 5.25% Dec11 interbank.

Thanks MrCrumbpacker, that makes sense.

Looking at this, the interbank rate is currently expected to rise all the way until Dec 2012, before it starts falling.

 

[MrCrumbpacker]

When all is said and done, it only gives a snapshot of market sentiment at the moment, the further out you go, the more volatile and less liquid it becomes.

The sentiment can also change rapidly, and interestingly at the moment where you have two diverging opinions as to direction (OECD today), the curve could flip. The contract seems very whippy at the mo, lurching from comment to comment. Much of the trading is day to day punting/scalping, but it is also used to lock in profits on FRA's and swaps.

Smart traders will use calender spreads and butterflies to trade the 'curve'

 

[PeterC]

yeah, the day the greece crap happened a week or two ago, the expectation was a drop of 0.25 or 0.5 almost certainly. a day or 2 later once things stabilised it was back to flat. the 30 day one is 'good enough' to get an idea (are there any 90 day ones in this format, i.e. based on IR?):
http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf

 

[boz]

here we go...
RBA just posted the latest money data for April nd that is pointing to slower growth, a step back After the good march data. I don't think there is any chance to get rate rises anytime soon. Next month also the May data will come out and I expect to be really bad afterwhat happened to markets and consumer/business sentiment

 

[warrenkh]

re

However, there is also an article out today, saying that the inflation is up again.

http://www.theage.com.au/business/cigarette-tax-sparks-inflation-jump-20100531-wop2.html

I agree that given the recent drop in shares, the RBA may be putting the rate on hold. But if the inflation keeps worsening, especially with weaker Australian dollar, then its hard to predict.

Warrenkh.2010

 

[Aaron Sice]

wait, so

consumer confidence - down.
business sentiment - steady.
housing credit - steady.
oil prices - down.
stock market - down.
unemployment - steady.
inflation.......up?

what?

in the same article it says this.....

The inflation rate jump isn't likely to alter the Reserve Bank's interest rate settings. Turmoil in global financial markets this month, centred on Europe's sovereign debt crisis, has all but eliminated expectations of further rate rise by the central bank over the next year.

 

[Ruddprime]

wait, so

consumer confidence - down.
business sentiment - steady.
housing credit - steady.
oil prices - down.
stock market - down.
unemployment - steady.
inflation.......up?

excuse me?

 

[Aaron Sice]

excuse me?

oh, well, there you go! thanks for posting that.

where's the inflation?