Michele Bullock’s week-to-week commentary paints the picture of a cautious but overall prudently dovish RBA, which has seen the rate-sensitive local 3s anchored to the 3.5% level. We believe the RBA will cut twice more in 2025, and the prospect of a dovish Fed through 2026 should be enough for traders to look for at least one more cut in 2026, which is likely to push the 3s down toward the psychological 3% level.
- We can see the local 3’s rotating around 3.5% into Christmas, with a spike down toward 3% not out of the question; the lower they move, the more supportive it is for rate-sensitive stocks.
MM is cautiously bullish towards the Australian 3s (yields lower)
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