Higher than expected Q3’21 CPI probably means the RBA will upgrade away from calendar-based forward guidance in November. A consequence of this is that they’ll likely stop targeting the April 23 and April 24 bonds. With terminal rates stable at ~2.25%, the curve is likely to flatten. It’s mostly a short end trade now.
This morning, Senate Leader McConnell offer the Democrats two paths to resolve the current debt ceiling. 1/ An expedited reconciliation process; and 2/ Allowing Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December (my emphasis). Option two probably isn’t that … Read more
As was widely expected (and priced) the RBNZ hiked their OCR 25bps to 50bps at their 6 October meeting. They indicated that there’s more tightening to come, noting rising capacity pressures and the need to reduce monetary policy stimulus to maintain price stability. The Committee agreed that rising capacity pressures would feed through into inflation. … Read more