RBA guides to lift-off in 2023; AUD 5y5y is high outright & v. USD

The RBA dumped YCC at their Nov’21 meeting but leant dovish against market pricing. Gov Lowe emphasized that the first hike might still be after April 2024 and said very clearly that hikes aren’t on the table in 2022. So, the short end is fully priced. I am cautious about following RBA promises, so I prefer the long end: AUD 5y5y seems high both in outright terms and against the US.

APRA shuts the CLF, tells banks to buy assets

[This is an edited version of a post that was first published on livewire, on 10 September 2021] In a move that’s a bit more aggressive than I had expected, APRA just announced that they will close the CLF (Committed Liquidity Facility).   The CLF will be reduced in four equal steps (1 Jan’22: $104 billion; 30 Apr’22: $70 … Read more

Get the banks to buy the bonds (or how to better align fiscal, monetary and bank regulatory policies)

[This is an edited, updated, and expanded version of a post that first appeared on livewire] The COVID-shock of 2020 put a spotlight on a design flaw in Australian regulations. At a time when governments are borrowing lots of money, and the RBA is buying government bonds to boost the economy, regulations discourage banks from … Read more