Inflation Fears Set to Upend Swap Traders Betting on RBA Pause
- Markets have gotten carried away in push for easing: Robeco
- Inflation is forecast to stay above 7% in Feb. from year ago
Pedestrians by the retail stores at Pitt Street Mall in Sydney, New South Wales, Australia.
Photographer: Brent Lewin/BloombergThis article is for subscribers only.
Traders expecting Australia’s central bank to stop raising interest rates next month, and then cut from July, may end up being disappointed.
Swaps covering the Reserve Bank of Australia’s July meeting now signal about a 50% chance of a rate cut, an about-face from two weeks ago when they were still expecting another hike by then. The nation’s three-year bond yield has tumbled to more than 70 basis points below the RBA’s benchmark, the most in a decade, in a bet rates will be lower by the time the securities mature.