Latest / Best of Business / Shane Solly: Harbour Asset Management spokesperson on markets pricing in rate cuts ahead of OCR update

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Shane Solly: Harbour Asset Management spokesperson on markets pricing in rate cuts ahead of OCR update · Best of Business

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  Speaker 2: Now just two more sleeps before the Reserve Bank makes
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  Speaker 2: its call on the OCR And there's an interesting dynamic
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  Speaker 2: at play here. Markets are firmly pricing in rate cats,
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  Speaker 2: but economists are quite divided. Shane solely from Harbor Asset
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  Speaker 2: Managements with me.
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  Speaker 1: Hey, Shane, Yeah, Hey, Heather, what's the market pricing.
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  Speaker 2: In at the point at this point in time?
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  Speaker 3: Yeah, yeah, Look, I think that's a really good point.
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  Speaker 3: There is a bit of division out of the market,
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  Speaker 3: the whole sell interest market. This is what we're dealing
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  Speaker 3: every day. It's pricing at about zero point two percent
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  Speaker 3: of a rate cut, so zero point two percent of
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  Speaker 3: a rate cap for this meeting, which implies a high
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  Speaker 3: but not one hundred percent probability of a normal point
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  Speaker 3: two five percent cut. But what is more importantly, I
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  Speaker 3: look out to November, there's a whole one percent, just
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  Speaker 3: under one percent priced and takes the official cash rate
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  Speaker 3: to just under four and a half. And if I
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  Speaker 3: go out to July this time next year, we're a
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  Speaker 3: whole two percent three and a half, So pretty interesting timing.
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  Speaker 3: It's all about the tone, as many things are here
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  Speaker 3: that it's all about whether we get a dubbish pause
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  Speaker 3: or a hawkish using.
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  Speaker 2: I mean, it's going to be dubbish, isn't it, Shane?
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  Speaker 2: Is there any other option?
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  Speaker 3: Well, you know what, it's the evidence is starting to
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  Speaker 3: accumulate that allow us, the Reserve Bank and other central
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  Speaker 3: bank is to step away from current settings they're getting.
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  Speaker 3: They're just too tight for where we are. Economy slowed,
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  Speaker 3: inflation slowed. So it's whether we actually see a cut
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  Speaker 3: this round or it's pushed out. Its tone you know,
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  Speaker 3: will be dubbish, it will be hey, we're going to
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  Speaker 3: get to cut rates. We're going to be there. And
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  Speaker 3: I think interesting really hither is whether the trading banks
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  Speaker 3: through mortgages actually do the hard yards for the Reserve Bank.
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  Speaker 3: There's still room for them to keep cutting mortgage rates,
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  Speaker 3: given where that whole cell intrastate, that whole celle funding
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  Speaker 3: markets moved.
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  Speaker 2: Yeah, because it's tough for people out there. I mean
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  Speaker 2: you'll have seen what Nick Scale is going through, right.
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  Speaker 3: Yeah, yeah, Well you know Nick Sally Australian retailer. It's
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  Speaker 3: all about consus discrition Rand they came out we did
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  Speaker 3: this week and said, guess what what's hurting us in
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  Speaker 3: our results is New Zealand June and July. We just
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  Speaker 3: saw traffic drop down thirty five percent Australia in contrast
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  Speaker 3: in Philly stable, so similar they're telling us that things
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  Speaker 3: are much tougher in New Zealand and Australia. We know it.
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  Speaker 3: Sometimes when you hear it from somebody externally, it's confirmation.
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  Speaker 2: Yeah, but a good news from Fletcher Building today. What
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  Speaker 2: do you make of that agreement to sell one hundred
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  Speaker 2: percent of trade Link.
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  Speaker 3: Yeah, look, I think it was expected, but nonetheless it's
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  Speaker 3: great that they've done it. It's been sold to a
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  Speaker 3: US based family group, pretty good price. In the process,
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  Speaker 3: they're used to pay down debt. It's a little bit
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  Speaker 3: of a win versus you know, we've had a bit
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  Speaker 3: of bad news with Golden Bay supply disruption last week
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  Speaker 3: and similarly, we're all the eyes are on what happens
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  Speaker 3: on Wednesday next weddingstation. Say, we're the four year result
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  Speaker 3: is their potential for additional provisions for some of these
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  Speaker 3: major projects. But simainly this puts them in a much
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  Speaker 3: better financial position to potentially of sit liabilities related to
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  Speaker 3: the Ipleix pipe litigation and Western Ausrail or the silicosis arrest.
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  Speaker 3: It's emerging, so certainly it's helpful and then the right
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  Speaker 3: direction for flectures.
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  Speaker 2: Shane's good to talk to you mate. Look after yourself.
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  Speaker 2: Thank you for that, Shane, Solly Harbor, Asset Management.
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