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Australian Reserve Bank Governor Glenn Stevens kept the benchmark rate stable – currency and inflation were higher than expected. The global outlook had brightened. Australia still feeling the effects of the looser (read accomodative monetary policy) the RBA has waged.
ANZ’s MORNING BRIEF EARLIER REPORTED:
EVEN ODDS FOR A RBA RATE CUT ON MELBOURNE CUP DAY: The market is evenly priced for a 25bp rate cut from the Reserve Bank of Australia at 4.30pm NZ time. Odds of a rate cut have slowly ratcheted down from around 80% to 50% following stronger-than-expected CPI data and a recovery in iron ore prices. Our Australian economics team had earlier pushed back their rate cut call back to December, and now find themselves in the minority with around three-quarters of economists expecting a 25bp cut to 3.00%. Expect Australian yields to bump higher on a “no-change” verdict but for any yield back-up to be capped by ongoing demand from bank balance sheets. As for the big race, “Lights of Heaven” looks good for a bob each way.
US ELECTION RACE TO CLOSE TO CALL. The latest Wall Street Journal/NBC nationwide poll has Obama leading Romney by the very slender margin of 48% to 47% ahead of tonight’s election (US time). Obama is also said to be holding the edge in key swings states. Markets expect an Obama-victory would be bond-positive and USD negative, although handling of the year-end fiscal cliff is likely to have a greater impact on the outlook for the US economy.