RBA: VIEW: CBA Expects One More Cut As More Optimistic On Growth
The RBA unanimously cut rates 25bp to 3.6% on Tuesday as was widely expected bringing total easing this cycle to 75bp. CBA expects one more rate cut in November and notes that its growth forecasts are more optimistic than the RBA’s. However, the risks are skewed that there will be more 2026 depending on the data.
- CBA believes that the “timing of the next rate cut could shift on the data flow. The Governor did not rule out back‑to‑back cuts. Inflation appears under control, so any acceleration of the cutting cycle we expect would have to be driven by a deterioration in the labour market”.
- “After the rate cut in November the clear risks sits with additional easing in 2026. The Governor largely endorsed market pricing for another couple of cuts. At this stage we have a slightly more optimistic outlook for the economy and a similar trimmed mean inflation profile, suggesting less cuts could be necessary. Part of this optimism stems from green shoots in the consumer.”
- “If the economy disappoints, or the labour market eases more than expected, a terminal cash rate of 3.10% would move to the most likely outcome.”
- “The next RBA meeting is held on 29‑30 September. The Governor rattled off numerous data that will be available ahead of this meeting. The key releases in our view will be the August and September labour force survey and the Q2 GDP data.”
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AUSSIE BONDS: Jun-54 Supply Faces A Higher Yield But Similar Curve
The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 17 June 2025 for the same amount. Several key factors will likely shape investor demand at today’s auction:
- The bond’s outright yield is 5-10bps higher from the previous auction, though it remains around 10bps below the peak reached in May.
- Sentiment toward longer-dated global bonds remains cautious, which may temper demand.
- However, the 10s/30s yield curve is around the same level as the last auction, sitting at its steepest level since late 2021 — a potentially supportive technical factor.
- Overall, pricing is expected to remain firm, underpinned by a stable yield profile and a more attractive curve backdrop.
- Results are due at 0200 BST / 1100 AEST.
US TSYS: Cash Open
TYU5 is trading 110-24+, unchanged from its close.
- The US 2-year yield opens around 3.893%, down 0.01 from its close.
- The US 10-year yield opens around 4.425%, down 0.01 from its close.
- MNI US OUTLOOK/OPINION: Analysts See Core CPI On Cusp Of 0.2% or 0.3% M/M In June. Ahead of tomorrow’s US CPI release, we note that the broad Bloomberg consensus looks for both core and headline CPI inflation at 0.3% M/M in June although unrounded estimates suggest a risk of rounding lower.
- MNI FED: Cleveland's Hammack: Close To Neutral Already, Important To "Wait And See": Cleveland Fed President Hammack (non-2025 voter, hawk) reiterated her patient approach to any future policy easing in an interview with Fox Business Monday. Hammack had previously cited a wide range of estimates of neutral rates from 2% to 4.6%
- The 10-year yield is again testing the 4.40/45% pivot within its wider 4.10% - 4.65% range. The market is clearly worried about inflation and the CPI this week will be a critical input into the market's thinking. A sustained close back above the 4.45% area could see more longs pared back, above here and the focus will turn back to the 4.60% area.
AUSSIE BONDS: AUCTION PREVIEW: ACGB Jun-54 Supply Due
The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 17 June 2025 for A$300mn. The sale drew an average yield of 4.9497%, at a high yield of 4.9550% and was covered 2.8433x. There were 50 bidders, 22 of which were successful and 16 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 52.9%.
- This week's ACGB supply is at the top end of the recent average weekly issuance of $1500-2000mn, with A$800mn of the 4.25% 21 March 2036 bond on Wednesday and A$1100mn of the 1.00% 21 November 2031 bond on Friday.
- During the first half of 2025-26, the AOFM plans to: issue a new October 2036 Treasury Bond (by syndication and subject to market conditions); conduct 2 Treasury Bond tenders most weeks; hold 1-2 Treasury Indexed Bond tenders each month.
- Issuance of Treasury Bonds (including Green Treasury Bonds) in 2025-26 is expected to be around $150 billion. Issuance of Treasury Indexed Bonds in 2025-26 is expected to be between $2 billion and $3 billion.
- Results are due at 0200 BST / 1100 AEST.
