Markets play catch up on rates meet

Friday 22 June 2012

A couple of weeks ago I wrote that markets were mispricing the next RBA rates meeting. No longer, with a hold now a 64% chance versus a cut at 36%. The Credit Suisse 12m futures market is still expecting 100bps points over the next year:

Ironically, this is happening just as global growth has again moved to the front burner of the market’s concerns.

In my view, however, we’re still going to need to see considerably more damage before the RBA will move in July.

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.