Via UBS:
Implications: UBS still -25bps by Nov; but risk of earlier “if needed” The RBA cut to 1.00% ahead of our long held dovish view. We still think their GDP forecasts will be downgraded again in their Aug SOMP, raising their UR profile (falling to 4¾%). Indeed, we still expect at least another 25bps cut by Nov, but with material risk of earlier “if needed”, especially if the Fed cuts in July & puts upward pressure on the AUD, or unemployment fails to fall. A week Q2 CPI (due Jul 31) outcome, and a lift in unemployment (this week) would materially raise the risk of an Aug cut. The RBA Sentiment index improved a touch in July, and it is now showing signs of bottoming albeit at very low levels. This is consistent with our view that while the RBA has an explicit easing bias, and will cut again, but likely not till Nov. We maintain our bias for a flatter curve.
MOAR cuts ahead.