RBA: MNI RBA Review-April 2025: Keeping Options Open
Apr-02 05:11
Download Full Report Here
- The RBA left rates unchanged at 4.10% on April 1, as was widely expected given the cautious tone following February’s 25bp cut. In the press conference, Governor Bullock said that it was a consensus decision and that easing wasn’t part of the discussion.
- It appears that the RBA is keeping its options open given that risks are to both sides and there is significant uncertainty around the outlook, especially from overseas. Upcoming Q1 CPI and March/April jobs data will be important in determining if the Board has become "more confident" that underlying inflation is returning "sustainably" to the mid-point of the target band, which enable it to consider the timing of the next rate cut.
- The central bank believes that Australia is unlikely to experience major direct effects from US tariffs given its small exposure to the US, but key concerns centre around how its main trading partners (China) & supply chains are affected and what retaliatory measures are taken. It noted that policy is "well placed to respond".
- A 25bp rate cut in May is given a 77% probability, with a cumulative 71bps of easing priced by year-end.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GOLD: Gold Post Modest Gains After First Weekly Loss for Year.
Mar-03 05:09
- Gold finished last week down for the first time in 2025, falling by 2.6%.
- Earlier last week, gold hit all time highs of US$2,951.73 and has trended lower since.
- Gold has exhibited its ‘safe-haven’ status given the uncertainty around the implementation of tariffs by President Trump in 2025, which followed on from last 2024 when it performed due to expected rate cuts.
- The moves in recent trading sessions comes despite the fundamental reasons for its rally remaining in place.
- The move lower last week still sees gold up over 8% for the year and opens at $2,857.83 gaining gradually throughout the day to reach @2,866.25
- The move lower however sees gold breach the 20-day EMA of $2,878.48, marking the first breach of this technical level this year.
- The moving averages are still trending upwards, a sign that the bullish momentum remains after eight successive weeks of gains.
- It appears that the US is moving closer to imposing tariffs on Canada, Mexico and China as soon as this week, a move that could see support for gold return.
ASIA STOCKS: Equities Higher On Strong China Data
Mar-03 04:54
Asian markets kicked off the week with solid gains, buoyed by upbeat Chinese factory data and a positive close on Wall Street at the end of February.
- Hong Kong’s HSI jumped 1.2%, driven by a 2% rise in the HS China Enterprises Index, with tech giants like Alibaba (+4.6%), Tencent (+3.7%), and Meituan (+2.5%) leading the charge, while the debut of Mixue Bingcheng’s shares soared 40% after its $444 million IPO. The Shanghai Composite edged up 0.3% to 3,332.27, and the CSI 300 rose as much as 1% before paring some gains, supported by stronger-than-expected February PMI data reflecting increased new orders amid tariff-driven export rushes, though the ChiNext jumped nearly 2.9%.
- In Japan the Nikkei 225 climbed 1.6%, while the TOPIX jumped 1.80&, while Australia’s ASX 200 advanced 0.8% reflecting optimism around potential US rate cuts and a pause in yen appreciation.
- However, Taiwan’s Taiex dropped 1.5%, and Bangkok’s SET fell 0.7%, while South Korean markets were closed for a holiday.
- Investors are focused on China’s upcoming National People’s Congress, hoping for a significant stimulus package to counter US tariffs—set to rise to 20% on Chinese goods this week—though uncertainty lingers as traders watch for last-minute tariff negotiations and broader geopolitical developments.
JGBS: Futures Weaker & Near Lows, US Tsys Weighing
Mar-03 04:49
JGB futures are holding weaker at session cheaps, -30 compared to the settlement levels.
- Outside of the previously outlined Jibun Bank Manufacturing PMI data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets that haven demand could lose its appeal should prospects improve for an end to fighting in Ukraine.
- Nevertheless, this weakness has started to reverse as some anticipate that slower US growth expectations could see traders increasingly price in a potential Federal Reserve rate cut as soon as June.
- “Moreover, the risk of a government shutdown from March 15 appears greater than ever.” (per BBG)
- Cash JGBs are flat (40-year) to 3bps cheaper (5-10-year zone) across benchmarks. The benchmark 10-year yield is 2.6bps higher at 1.404% versus the cycle high of 1.466%.
- The 30-year yield is 0.6bp higher at 2.366% after hitting a high of 2.371%, the highest since 2008.
- Swap rates are 1-2bps higher. Swap spreads are mixed.
- Tomorrow, the local calendar will see Labour Market, Capital Spending, Company Profits, Monetary Base and Consumer Confidence data alongside 10-year supply.
