August 12, 2024 • 3 mins
The Reserve Bank is set to make a call on the Official Cash Rate this week, and experts are feeling hopeful.
While economists are divided on the outcome, markets have priced in possible rate cuts going forward.
Shane Solly from Harbour Asset Management explains what we can expect.
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Speaker 1 (00:00):
Now just two more sleeps before the Reserve Bank makes
its call on the OCR And there's an interesting dynamic
of play here. Markets are firmly pricing in rate cats,
but economists are quite divided. Shane solely from harbor asset
managements with me.
Speaker 2 (00:11):
Hey, Shane, Yeah, hey, Heather, what's the.
Speaker 1 (00:13):
Market pricing in at the point, at this point in time.
Speaker 2 (00:15):
Yeah, yeah, Look, I think that's a really good point.
There is a bit of division out there. The market,
the whole sale interest market. This is what we dealing
every day. It's pricing at about zero point two percent
of a rate cut, so zero point two percent of
a rate cap for this meeting, which implies a high
but not one hundred percent probability of a normal point
two five percent cut. But what is more importantly, I
look out to November, there's a whole one percent, just
(00:38):
under one percent priced and takes the official cash rate
to just under four and a half. And if I
go out to July this time next year, we're a
whole two percent three and a half. So pretty interesting timing.
It's all about the tone, as many things are here
that it's all about whether we get a dubbish pause
or a hawkish using.
Speaker 1 (00:56):
I mean, it's going to be dubbish, isn't it, Shane?
Is there any other option?
Speaker 2 (01:00):
You know what? It's the evidence is starting to accumulate
that allow us, the Reserve Bank and other central bank
is to step away from current sittings they're getting. They're
just too tight for where we are. Economy slowed, inflation slowed.
So it's whether we actually see a cut this round
or it's pushed out. Its tone you know, will be
(01:22):
dubblesh it will be hey, we're going to get to
cut rates. We're going to be there. And I think
interesting really hither is whether the trading banks through mortgages
actually do the hard yards for the Reserve Bank. There's
still room for them to keep cutting mortgage rates given
where that whole cell interstate, that whole sale funding markets moved.
Speaker 1 (01:41):
Yeah, because it's tough for people out there. I mean,
and you'll have seen what Nick Scale is going through, right.
Speaker 2 (01:46):
Yeah, yeah, well you know nix Sali Australian retailer. It's
what about the consumer discriution rand. They came out we
did this week and said, guess what what's hurting us
in our results is New Zealand June and July just
saw traffic drop down thirty five percent Australia in contrast
in Philly stable. So sermly they're telling us that things
(02:07):
are much tougher in New Zealand and Australia. We know it.
Sometimes when you hear it from somebody externally, it's confirmation.
Speaker 1 (02:13):
Yeah, but a good news from Fletcher Building today. What
do you make of that agreement to sell one hundred
percent of trade Link.
Speaker 2 (02:20):
Yeah, look, I think it was expected, but nonetheless it's
great that they've done it. It's been sold to a
US based family group, pretty good price in the process
being used to pay down debt. It's a little bit
of a win versus you know, we've had a bit
of bad news with Golden Bay supply disruption last week
and similarly, where all the eyes are on what happens
on Wednesday next weddingstation, say we're the four year result
(02:43):
is their potential for additional provisions for some of these
major projects. But certainly this puts them in a much
better financial position to potentially offset liabilities related to the
iPLEX pipe litigation in Western Australia or the silicosis rescue.
It's emerging so certainly it's helpful and then the right
direction compleatus.
Speaker 1 (03:03):
Shane's good to talk to you mate, look after yourself.
Thank you for that, Shane, Solly, Harbor Asset Management.
Speaker 2 (03:08):
For more from Heather Duplessy Allen Drive, listen live to
News Talks the'd B from four pm weekdays, or follow
the podcast on iHeartRadio
Now just two more sleeps before the Reserve Bank makes
its call on the OCR And there's an interesting dynamic
of play here. Markets are firmly pricing in rate cats,
but economists are quite divided. Shane solely from harbor asset
managements with me.
Speaker 2 (00:11):
Hey, Shane, Yeah, hey, Heather, what's the.
Speaker 1 (00:13):
Market pricing in at the point, at this point in time.
Speaker 2 (00:15):
Yeah, yeah, Look, I think that's a really good point.
There is a bit of division out there. The market,
the whole sale interest market. This is what we dealing
every day. It's pricing at about zero point two percent
of a rate cut, so zero point two percent of
a rate cap for this meeting, which implies a high
but not one hundred percent probability of a normal point
two five percent cut. But what is more importantly, I
look out to November, there's a whole one percent, just
(00:38):
under one percent priced and takes the official cash rate
to just under four and a half. And if I
go out to July this time next year, we're a
whole two percent three and a half. So pretty interesting timing.
It's all about the tone, as many things are here
that it's all about whether we get a dubbish pause
or a hawkish using.
Speaker 1 (00:56):
I mean, it's going to be dubbish, isn't it, Shane?
Is there any other option?
Speaker 2 (01:00):
You know what? It's the evidence is starting to accumulate
that allow us, the Reserve Bank and other central bank
is to step away from current sittings they're getting. They're
just too tight for where we are. Economy slowed, inflation slowed.
So it's whether we actually see a cut this round
or it's pushed out. Its tone you know, will be
(01:22):
dubblesh it will be hey, we're going to get to
cut rates. We're going to be there. And I think
interesting really hither is whether the trading banks through mortgages
actually do the hard yards for the Reserve Bank. There's
still room for them to keep cutting mortgage rates given
where that whole cell interstate, that whole sale funding markets moved.
Speaker 1 (01:41):
Yeah, because it's tough for people out there. I mean,
and you'll have seen what Nick Scale is going through, right.
Speaker 2 (01:46):
Yeah, yeah, well you know nix Sali Australian retailer. It's
what about the consumer discriution rand. They came out we
did this week and said, guess what what's hurting us
in our results is New Zealand June and July just
saw traffic drop down thirty five percent Australia in contrast
in Philly stable. So sermly they're telling us that things
(02:07):
are much tougher in New Zealand and Australia. We know it.
Sometimes when you hear it from somebody externally, it's confirmation.
Speaker 1 (02:13):
Yeah, but a good news from Fletcher Building today. What
do you make of that agreement to sell one hundred
percent of trade Link.
Speaker 2 (02:20):
Yeah, look, I think it was expected, but nonetheless it's
great that they've done it. It's been sold to a
US based family group, pretty good price in the process
being used to pay down debt. It's a little bit
of a win versus you know, we've had a bit
of bad news with Golden Bay supply disruption last week
and similarly, where all the eyes are on what happens
on Wednesday next weddingstation, say we're the four year result
(02:43):
is their potential for additional provisions for some of these
major projects. But certainly this puts them in a much
better financial position to potentially offset liabilities related to the
iPLEX pipe litigation in Western Australia or the silicosis rescue.
It's emerging so certainly it's helpful and then the right
direction compleatus.
Speaker 1 (03:03):
Shane's good to talk to you mate, look after yourself.
Thank you for that, Shane, Solly, Harbor Asset Management.
Speaker 2 (03:08):
For more from Heather Duplessy Allen Drive, listen live to
News Talks the'd B from four pm weekdays, or follow
the podcast on iHeartRadio
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