Well, they’ve disagreed before.

That tag line is in response to the emergent difference between the cash rate futures market (which makes bets on where near term policy settings will go) and the actual rate, as set by the RBA.

The RBA Governor, Philip Lowe, has pointed to the market disconnect as an outright error, and for the most part stuck to the narrative of no near term hikes (out to 2024). He thinks the bond market has it wrong.

Historically, the market is usually right, and a central bank is often merely following the market, which, in turn is attempting to follow the natural rate, based on estimates of expected growth, inflation and term premia.

That 2017-18 disagreement was in response to all the hawkish sounding throat-clearing, from the RBA, that never eventuated. It is the reverse now.


Not much implication for us. We think the AUD is about right at $0.75c, plus or minus a few cents (which is as close as we can ever get it, by range) with risks in general to the downside (over things like the sustainability, or otherwise, or iron ore).

We continue to see cyclical upside pressure on rates, and we continue to see pressure on long duration growth stocks, alongside pressures in discretionary retail, as a result of the shift in spending from goods to services as the economy reopens.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.