AUSSIE BONDS: RBA Shows Commitment To The Cause   
                               

Aussie bonds were softer into the first RBA decision of ’21, but the RBA’s       

pre-announcement of A$100bn worth of bond purchases, which will run at the same  

rate as the current scheme from when it runs dry in mid-April, caught markets    

off guard owing to its timing (the size of the new scheme was in line with       

broader exp.). This left YM unchanged at the bell, while XM unwound its post     

RBA bid, finishing the day 0.5 softer, 4.5 shy of best levels.                   

* The rhetoric surrounding the Bank’s economic projections was a little more     

  upbeat (as expected), but wasn’t a gamechanger, with the unemployment rate     

  set to remain comfortably above the Bank’s estimate of NAIRU across the        

  forecast horizon (at least under the Bank’s forecasts)                         

* The Bank clearly wanted to fend off any unwanted tightening of financial       

  conditions that continued/broader speculation re: bond purchase tapering       

  could bring as it noted that “the decision to extend the bond purchase         

  program will ensure a continuation of this monetary support.”                  

* The inclusion of the phrase “until 2024 at the earliest” in its forward        

  guidance was an interesting development, such explicit calendar guidance has   

  the ability to be used as a clearer staging post for monetary policy           

  expectations as we move forwards. It was perhaps this explicit inclusion that  

  allowed XM to work away from best levels into the close.    

* Attention now moves to RBA Governor Lowe’s discussion on the “The Year   

  Ahead,” which is due to be delivered on Wednesday.                                           

                                                                                  

 

James Fay Founding Partner T +44(0)20 7422 2978 M +44 (0)7500 988 788 E james.fay@archr.com 49 Carnaby Street, London, W1F 9PY United Kingdom ARCHR.COM

 

 

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