Split decision
The Reserve Bank's July decision was split by 6 votes to 3 to remain on hold.
This was clearly a bit of a surprise for markets, with the Aussie dollar jumping from 65 US cents to 65½ cents, and the 3-year government bond yield trading at 3.45 per cent today, up from around 3.3 per cent in the lead-up to the policy decision announcement.
The June quarter inflation figures may still show some residual inflationary pressures, but at this stage markets are expecting an interest cut next month.
Looking further ahead, the curve is a little shallower, with market pricing for the terminal rate at around 3 per cent for this cycle, effectively implying three further cuts by Q1 2026, but perhaps no more than that.
Source: ASX
The
upturn in the NAB Survey seems largely to have been driven by the improving outlook for construction and housing development.
I'm not sure what the implications for asset markets are, if any.
The Aussie stock market is broadly trading flat over the week, and the recent trends in auction markets are pointing to a gradual upswing in housing prices.
It's worth remembering that the government's First Homebuyer Guarantee Scheme for first homebuyers with a 5 per cent deposit is set for launch on 1 January 2026, with no Lenders Mortgage Insurance and the government guaranteeing up to 15 per cent of the loan balance.
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