RBA rate cuts priced as bank panic rises

It’s official. RBA rate futures are pricing cuts:

Assuming this banking crisis intensifies, the cuts are going to be steeper than that. FRA-OIS in the US is suggesting as much:

Aussie bank wholesale funding costs are rising but so far it’s been subdued. However, this was pre-Credit Suisse:

The Aussie bond market is already pricing two cuts within a year and that’s conservative. Note all yields are sitting right on downside support:

The curve is steepening. A classic recessionary signal:

It sure looks like an end-of-cycle credit event has begun.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.