Bloxham buster trade hots up

A quick check on interest rate markets today shows an ongoing rise in expectations for more rate cuts. We’re beginning to build in a third cut now:

sg2013050241750

And the last few days of weak data flow have sent the odds of a cut next week to a 56% in the affirmative:

sg2013050241725

I’m still undecided between this one or June.

David Llewellyn-Smith
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Comments

  1. Any chance we could replace the “Pascometer” with the “Brilliant Bloxometer”? Seems like there would be some nice profits!

  2. Weak business profits (implicit in the decline in the growth rate of business tax revenues), continued weak housing and household demand for credit, lack of growth in labour demand and per capita incomes, stagnation in the private economy, enduring weakness in overseas indicators, absence of inflation, (nil change in import price index in the March quarter)…what would hold them back?

    • All of those things! What do you expect foreign creditors to do if interest rates are cut? Take their money at an A$ high, and run, or just plain take their money and run? If I were Wayne Swan I’d be sleepless at the thought of the funding underpinning the economy disappearing, overnight…

  3. Janet they can run to yen and watch their investment destroyed by money printing-or to EUR and watch it destroyed by a break up-or they can rush to USD and enjoy ZIRP until 2016/7-yippee. Not sure your logic holds. 3 point something % is still a lot better than 1point something %-and I don’t see them rushing away from Telstra at the moment either.Mrs Watanabe is presumably buying like mad.

  4. Why doesn’t RBA regulate reserve requirements on mortgages or business loans this way they can take pressure off dollar and keep housing in check. Too easy answer?