The Australian bond market has departed Planet Earth and is now trading somewhere in the outer Oort Cloud. It is quite clear that Australia does not have the same inflation problem hitting other developed economies. It is equally clear that the RBA knows it. The only one out of the loop is the bond market.
Following today’s weak wage data, which printed 0.66% on the QTR and 2.3% on the year, the RBA has zero incentive to hike rates. This undershot its own low target of 2.5% by the end of 2021.
Q1,21 is the Morricession. If anything, it is going to deliver even weaker quarterly growth. That will get us to the end of May with wage growth in the low 2% range.