Australian housing crisis: How the latest inflation figures are very bad news ... trends now
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Australian home borrowers could miss out on a rate cut in 2024 and even face another rate rise next year, financial markets fear.
Futures market pricing on interest rates dramatically changed on Wednesday after new inflation data showed the consumer price index increasing in March.
The 30-day interbank futures market went from pricing in at least two rate cuts in late 2024 to no rate cuts at all this year, with the Reserve Bank of Australia leaving the cash rate on hold.
Earlier this month, the futures market was pricing in several rate cuts in late 2024.
But now, the futures market is expecting the cash rate to stay at a 12-year high of 4.35 per cent, with no relief in sight soon following 13 interest rate rises in 18 months.
Australian home borrowers could miss out on a rate cut in 2024 - and even face another rate rise, financial markets fear (pictured is a stock image)
The Australian bond market is now also pricing in another possible interest rate rise, with yields on two-year commonwealth government securities climbing by 12 basis points on Wednesday to 4.2 per cent.
Rising yields mean investors want a bigger return for buying a government bond and are a reflection of market pricing on interest rates.
A yield is the annual return an investor receives for holding a government bond.
A related coupon rate of 4.2 per cent means someone who bought the security for $1,000 gets back $42 annually until a set date when the bond matures.
That is when the investor is repaid what they lend the government by buying
