The RBA meeting today is a no brainer. No cut:
More interesting, markets are now pricing out future cuts at a rapid pace. A few short weeks ago, the Credit Suisse rate cut index was pricing five cuts in the next twelve months. Now it’s down to two:
I remain convinced that the next move is down unless we see substantive progress on the progress for more stimulus around the world. The global economy is still slowing and either Draghi delivers, the Fed delivers or China delivers more staged spending or this is rally is simply the flip side of current risk-on sentiment in currencies and equities. The latter in particular is important. If China can deliver another delay to the melt in Australia’s terms of trade then that could effect rates.
For the time being, though, rates will still fall later this year as mining begins to add to unemployment.
