Last week’s soft Australian employment data brought three rate cuts this side of Christmas back into play, creating a tailwind for the markets’ explosive move on Friday. Markets are pricing in a more than 60% chance we get the third cut by the RBA in the next six months, with the first two supposedly a given, which feels a touch complacent after their hold this month. We continue to see a test of 3% by the 3s at some stage through 2025/6 which should offer some relief to mortgage holders.
- We can see the local 3’s rotating around 3.5% into Christmas, with a spike 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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