A client note from ANZ's Senior Rates Strategist Martin Whetton and Rates Strategist Savita Singh

These two are well worth heeding.

On today's CPI and what it means for the Reserve Bank of Australia (bolding is mine):

  • Today's weaker-than-expected CPI report is a game changer
  • Underlying inflation over the past six months annualises to 1.7% - well below the RBA's target band and forecasts
  • This now makes the November / December policy meetings live in our view
  • The market is currently pricing in a 50% chance of a cut next week, which seems fair given the recent lift in mortgage rates makes policy easing by the RBA presentationally a little difficult

Brief comments on the other central bank meetings this week:

  • Tonight's FOMC meeting is expected to be a dead rubber
  • The BoJ is unlikely to shift on QE this Friday, but rates markets are trading as though they will, with long bond yields falling.