Further Robust Recovery In Australia

RBA will keep sounding dovish

The Reserve Bank of Australia is fighting a rearguard action to keep the AUD from appreciating and bond yields from rising. But data like these suggest that these are the directions that markets should reasonably be heading. All it would take now would be a little stronger inflation data to add to the mix, and markets might justifiably question the RBA's strong assertions that rate policy will not change until at least 2024 (if it does not look credible, no amount of forward-guidance will help). And further dollops of asset purchasing, like we saw earlier this week, will appear like the one-way trading bet they are if the RBA keeps trying to stifle rising bond yields. 

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