Markets pricing June rate cut

As suggested last week, with the bulk commodities sliding it was only a matter of time…Cross-posted from Mark the Graph.

Markets appear to be moving early to price in a June rate cut. The swaps indicator (which gives a lot of false positives) is well into rate cut territory. But the more cautious 30-day bank bills rate is also edging towards pricing in a rate cut in June.

The ASX Target Rate Tracker is presaging official interest rates at 2.5 per cent by October this year. I am less convinced. I think the RBA will have an eye to tradables inflation as the dollar falls.

More generally, the market nerves indicator is moving up.

But still along way off the GFC highs.

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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.