EU CREDIT SUPPLY: EDF IPT

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• The next RBA decision is on April 1 and it is widely expected to keep rates at 4.10% after sounding very cautious when it cut 25bp on February 18. Governor Bullock warned that one rate cut did not mean another would automatically follow as “upside risks remain” and that market pricing was too optimistic.
• The Board is likely to reiterate its data dependence, while the economy since February has developed broadly as it expected. Given that unchanged policy is projected, the statement will be scrutinised for any moderation in February’s cautious tone.
• While a 25bp rate cut in April is given only a 5% probability, a cumulative 71bps of easing is priced by year-end. The market’s reluctance to price in a cut for tomorrow reflects the RBA’s cautiousness surrounding February's easing.
• The prospects for a rate cut at the May 20 meeting are open given it occurs after Q1 CPI on April 30, Q1 WPI May 14, two sets of jobs data, the election and will include updated RBA projections which are likely to include more details on US tariffs. 

GBP STIRs also adjust to the risk-off price action stemming from tariffs.

• BoE-dated 1.5-4.0bp more dovish across ’25 meetings.
• ~20bp of easing now priced for May, ~24bp through June, ~36.5bp through August and ~55.5bp through year-end.
• SONIA futures 0.5-8.0bp firmer.
• Expect macro cues to dominate on Monday, with BoE lending data providing the most meaningful UK data release.
• The first major UK event risk of the week for the short end to digest will be tomorrow’s appearance from BoE’s Greene. She will speak on UK policy and macro conjecture.
• Further out, final PMIs and the BoE DMP round off this week’s UK data calendar.

• Latest reports suggest that the US have been tightening the screws on South Africa on several fronts amid escalating bilateral tensions. The US cut all military assistance and co-operation with the South African Defence Force (SADF), according to an internal memo seen by the Sunday Times. In addition, according to a piece in Afrikaans-language outlet Rapport, the US told South Africa’s military attaché Brigadier Gen. Richard Maponyane that he was no longer welcome in the country. Freedom Front Plus (FF+) party revealed South African companies were among those targeted by US export restrictions for allegedly providing support and training to Chinese fighter pilots.
  • This comes amid an escalation in tensions between the US and South Africa, which recently resulted in the expulsion of the South African ambassador. The spillover into military cooperation may generate further problems as Pretoria is struggling to maintain its military capabilities amid a failed stabilisation mission in the DRC and reports suggesting that much of its air force is effectively grounded.
  • South Africa is reportedly still looking to mend ties with the US but made it clear that it won't back down on its International Court of Justice (ICJ) case against Israel. Furthermore, the ANC said that its "leaders are not accountable to Washington" amid reports that the US could roll out personal sanctions against South African officials.
• Elsewhere, South Africa's M3 money supply growth slowed to +6.05% Y/Y in February from +7.10% prior, while private sector credit growth fell to +4.68% Y/Y from +4.59%. Monthly trade balance for the month of February will cross the wires at 13:00BST/14:00SAST.