The RBA hikes again, and signals that the job isn’t done, it’s data dependent, and you should absolutely think about sticking c300bps atop 4.10% when contemplating 30-year financial obligations.

Now the initial reaction can often fade, so we don’t put tremendous stock in the below, for any given day, unless the magnitudes are so enormous that we can detect meaningful shifts in expectations.

Overall, clearly consistent with a negative monetary shock (yes, obviously, but still, have to do it) and we’d imagine, given the ongoing emphasis about data dependance, and the inflation shock earlier in the week, that 10s might attempt to move towards 4% again.

Our long run view is that 10s wind up back at 2.5-3%, not anything north of 4%, so we would regard that as good buying, but have been waiting for this last gasp of inflation, and requisite central bank hawkishness, to make that move.

We are going to need another scale for where consumer confidence bombs out.

Interestingly, reading market participant reactions, Zac Gross (economic lecturer down in Melbourne) who comments “the higher rates go today the sooner they fall”.

I think that take is correct, and that’s how the market is largely positioned, near term, hence the downward slope to the cash rate futures market, with the added extra of “and the tail-risk recession-risk pushes 10s down further”, which isn’t how the market is positioned.

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