they have in the past...!
Will RBA reduce rates by 0.25% or 0.50% in September
- Thread starter Pete_d
- Start date
0.25% cut is my guess.
Would be looking for hold at 7.25% as a surprise event, will be an interesting time for the AUD anyhow. In terms of risk reward this is a special as nobody is mentioning it.
Last time the 90d bank bills had collapsed before they started the cutting cycle, the time before they were right at the cash rate, presently they are around 7.15%.. so I think a 0.25% cut.... no idea what is going on but let's appear like everything is measured and orderely and we are still in control move from the RBA.
Would be looking for hold at 7.25% as a surprise event, will be an interesting time for the AUD anyhow. In terms of risk reward this is a special as nobody is mentioning it.
Last time the 90d bank bills had collapsed before they started the cutting cycle, the time before they were right at the cash rate, presently they are around 7.15%.. so I think a 0.25% cut.... no idea what is going on but let's appear like everything is measured and orderely and we are still in control move from the RBA.
Nice chart Andrew. The bank bills have switched up after a long down trend since July
http://www.nabcapital.com/BondCreditMarkets/BankBills/Analysis.aspx?Date=29+Aug+2008
This will probably give them cause to cut 0.25% only.
http://www.nabcapital.com/BondCreditMarkets/BankBills/Analysis.aspx?Date=29+Aug+2008
This will probably give them cause to cut 0.25% only.
good chart,
do you have data also for the last month and the last few days of the 90 day bank bill? For sure seems the cut will be passed in all from the banks.
About the rates I recommend a read of this poll from Reuters to the expert economist about rate expectation:
http://www.forexfactory.com/news.php?do=news&id=103450
Seems 7.0% next week is by far the way to go and I believe the RBA would not surprise the markets.
My opinion is like the median: of 7.0 next week and 6.75 by the end of the year and 6.25 within the first 6 month of the next year.
Of course this poll is done at current data and information and different reading of the economy in the next months would change the forecast.
Agree, 0.5% first and then another 0.25% before the end of the year
Thanks,
I used to check the libor for the AU$ as well as other major currency but the bank accepted bills from the rba website seems a good alternative. Do you think it is the best indicator for short term bank funding costs? the advantage of the libor is that goes up to 12 months. May be iif you are good with excel you can draw a chart of the libor as well and compare it with the bank bills.The link for the libor is:
http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=141&a=11948
that is an interesting question,
well, the libor at 12 months was just over 7.4% a week ago, that is suppose to be the rate that the major banks get their funding, i would expect deposit term of 12 months at least from major banks should go below that 7.4%. Over that amount for banks is pretty much their profit for the 12 months term. To give you an idea, the libor at the end of june was over 8.5%. So it is a good drop of cost for funding for them in the 12 month term in the last couple of months. I believe around half of the drop is because the cost of funding is in a better shape and half because the rate expectations are better. So i believe i gave you the way to guess what is going to happen...
At least if you keep an eye on the libor you can see in which direction the banks are moving next their rates, for sure there will be few days of time for you to fix your rate before they pull it up.Finally it is possible that banks would pull down the variable rate more then RBA would do. But that has got a lot to do with banks funding strategy, cartel and competitors and try to pull up the sentiment of their shareholders (after all it is all about a war between banks shareholder and property investor
)Would be interesting to compare Aussie and US spreads (via ted spread - 90 day libor : 90 day US t bills).
If Australia is truly decoupled from the USA, then it should show in credit risk.
If Australia is truly decoupled from the USA, then it should show in credit risk.
Yes but you have to keep in mind about the rate cut and increase expectations, in june for example was expected another increase in Australia, now it is expected a series of cuts. What you could see in june was higher rates for all the major currencies. Now in Australia rates are gone down more then what they did in other countries but as I said before probably 50% is because of less risk and 50% because of expectations (but the 3 months is a bit different then the 12 months).
Anyway you are right and would be interesting to compare graph and also I would add the other major currency to it (specially the Euro, yen and GB pound)
St George have some research predicting a 25BP cut and a possible rate of 6.25% by early 2009.
Some in the market are projecting the RBA to cut rates as much as 50bp
next month. But inflationary pressures (stemming from e.g. income
gains via the 20% increase in the terms of trade this year) are still
prevalent. This, we believe, would prevent the RBA from fuelling the
economy by cutting too much too soon. We expect the RBA to cut rates
by a more measured pace. On balance, we project a 25bp rate cut next
month and forecast rates to move as low as 6.25% by early 2009. But, we
won’t fully rule out a larger 50bp rate cut on September 2.
Some in the market are projecting the RBA to cut rates as much as 50bp
next month. But inflationary pressures (stemming from e.g. income
gains via the 20% increase in the terms of trade this year) are still
prevalent. This, we believe, would prevent the RBA from fuelling the
economy by cutting too much too soon. We expect the RBA to cut rates
by a more measured pace. On balance, we project a 25bp rate cut next
month and forecast rates to move as low as 6.25% by early 2009. But, we
won’t fully rule out a larger 50bp rate cut on September 2.
Wizard are pretty confident they're going down by at least 0.25%....
Wizard cuts home loan interest rate
Wizard cuts home loan interest rate
TC, you obviously don't hold any discretionaries.
OK, fair call Winston. That was a poor choice of words I used. I suppose there is a little pain about. people are cutting back spending. That is obvious.
Where are the big job losses of previous recessions?, but that could yet come, and it is starting. Amazing the job losses already and it's starting to add up. That's when the big pain will come, higher unemployment.
I definately think there is worse to come, we just haven't seen it much yet. The share market losses have predicted what's to come very well.
See ya's.
No worries TC. I should have put a smiley in the previous post.
I agree there's worse to come. Everyone is getting excited about the RBA cutting rates. But we've still got to deal with a US recession, escalating food, and peak oil. And I honestly cannot see how Australian households can take on more debt. If they can't, then asset prices aren't going up much, and I reckon for many years.
I reckon it is so hard to tell when a recession starts these days cos cpi calculations are full of bull. They do all this substitution, weighting, and hedonic adjustment.
Anyways TC, being in agriculture, you'll be apples for the next 50 years.
I agree there's worse to come. Everyone is getting excited about the RBA cutting rates. But we've still got to deal with a US recession, escalating food, and peak oil. And I honestly cannot see how Australian households can take on more debt. If they can't, then asset prices aren't going up much, and I reckon for many years.
I reckon it is so hard to tell when a recession starts these days cos cpi calculations are full of bull. They do all this substitution, weighting, and hedonic adjustment.
Anyways TC, being in agriculture, you'll be apples for the next 50 years.
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