The interest rate swap (IRS) market is pricing an approximate 0.15% cut in the Official Cash rate by the Reserve Bank on Tuesday, 3 November 2020, but with keener expectations than for the October 2020 meeting.

Interpreting the implied forward yield curve (blue line) and the IRS yield curve (red line) on the chart, the IRS market expects the Official Cash rate to be less than 0.25% for the next 3 years.

An approximate 0.15% cut is insignificant compared to the Reserve Bank longing to expand its already hyperinflated balance sheet by perhaps adding long term bonds to its buying list.

Like the Federal Reserve and almost all other central banks around the world by design also became the buyers of last resort.

The bond and stock markets will cheer and keep on pushing bond prices higher (interest rates lower) and stock prices higher (and not just a little bit higher, but lots higher) until a day comes to pass when it will all …

If you are considering fixing your home loan interest rate then it is imperative that you get your timing, the term, and the interest rate level correct.

Seek your own advice to discover what may happen next and what is best for your personal circumstances.

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