CPI was released this morning and declined from 4.6% in the year to March 2026, to 4.2% for the 12 months to April. Housing continues to be one of the top contributors, up 6.3%, as was transport up 6.6% and alcoholic beverages up 2.8%. The important trimmed mean was up 0.1% to 3.4%, the RBA Monetary Policy Board’s preferred measure.
I was surprised to see interest rate sentiment change so quickly last week, given higher unemployment figures. It’s not good that it’s rising, but inflation is still outside the target 2-3% range.
The cash rate should be a look through, longer term view of the direction of the economy. Data is important, but cash rate changes take time to work through the system.
I thought there was a chance at the last RBA Board meeting that they would keep rates on hold, and they may decide to do so next month, but it’s incredibly important that inflation is not allowed to take hold.
Insight Investment’s team assessed our domestic rate outlook earlier this week, concluding the difference between us and the US is difficult to justify.
The global bond sell-off last week had 30-year US government bond yields exceed 5% for the first time since 2007. Seema Shah from Principal Asset Management listed the reasons for the rise and what needs to happen for bonds to rally.
The very popular monthly global asset allocation from Thomas Pollaouec of T. Rowe Price is back with a changed bond perspective.
I really like BNP Paribas’ Chris Iggo’s commentary, and this week, he puts inflation into perspective.
Finally, we have a very good article about China’s foreign policy in relation to the US and its domestic economy from Janu Chan of Bite-Sized Economics.
In Australian corporate bond market news:
- Bank of Us has launched a one-year senior unsecured deal with price guidance of 95 basis points over 3m BBSW
- BPCE has priced a senior tranche and a subordinated social tranche:
- Raised $1 billion in a five-year floating rate senior at 108 basis points over 3-month BBSW
- Raised $400m in a 15-year non-call 2 (15NC2)subordinated social tranche
- Korea Land and Housing Corp has launched a three-year senior unsecured Kangaroo social bond with price guidance of 65-70 basis points over 3-month BBSW
- Metropolitan Life Global Funding (Metlife) has priced a $550m ten-year funding agreement-backed deal with a 6.3188% coupon
- CDC Date Centres has mandated a subordinated notes fixed to floating and/ or floating 30NC5 and/ or 30 NC7.5 years deal
- Transurban Queensland has mandated a dual tranche benchmark senior secured bond with 7.25 years and/ or 10 years
- Ventia Services has raised $300m in a seven-year senior unsecured fixed-rate bond priced at 6.283% or 155 basis points over semi quarterly swap
- Waypoint REIT has mandated a six-year senior unsecured fixed-rate bond
- Westpac raised $3 billion in a three-year senior unsecured floating rate deal priced at 60 basis points over swap
Have a great week.
