Economic Watch — Week Ending 18 September 2026
Rates
The RBA has not met since holding the cash rate at 4.35% on 12 August. The next decision lands 2:30pm AEST on Tuesday 29 September — eight days out. The trail is unchanged:
- 4 Feb 2026 — +25bp to 3.85%
- 18 Mar 2026 — +25bp to 4.10%
- 6 May 2026 — +25bp to 4.35%
- 17 Jun 2026 — hold at 4.35%
- 12 Aug 2026 — hold at 4.35%
The Fed moved first. On 16 September the FOMC voted 12–0 to raise the target range by 25bp to 3.75–4.00%, effective the 17th — the first increase since July 2023. The effective funds rate printed 3.88% on 17 September (NY Fed), up from 3.63%. Chair Warsh framed it as supporting "a timelier return" to the 2% goal, and the fresh Summary of Economic Projections shows 12 of 18 members backing at least one more hike this year (median 2026 around 4.125%), four favouring 50bp more, and only two calling the current range adequate. The market took it calmly — the move was roughly 93% priced — and the US 10-year actually fell on the day, ending the week at 5.00% (+2bp), within a whisker of last Friday's close. The hawkishness was in the price; the long end survived the event.
The domestic front end did not sit still. The AU 2-year printed 4.999% on 16 September (RBA statistical table F2) — +16.4bp on the week, +39.1bp on the month, and now ~65bp above the cash rate. The 10-year sits at 5.348% (+14.6bp on the week, +26.1bp on the month), leaving 2s10s at +35bp. Note the composition: the Fed's move narrowed the AU–US policy differential from +72bp to +47bp — and the AU 2-year went up anyway. The front end has stopped following the Fed. It is pricing the RBA, and at a 65bp premium it is pricing more than a single 25bp move.
Housing
Friday closes, 18 September:
| Close | Day | Week | |
|---|---|---|---|
| GMG | 25.62 | -1.5% | -4.8% |
| SGP | 4.08 | -2.9% | -0.2% |
| SCG | 3.44 | -1.7% | -0.6% |
| VCX | 2.32 | -1.7% | -2.1% |
| MGR | 1.745 | -2.0% | -0.6% |
| GPT | 4.46 | -1.3% | +1.6% |
| CBA | 152.43 | -1.0% | -1.1% |
| WBC | 34.75 | -0.2% | +1.6% |
JHG — no quote for the third straight run; the data-feed gap on both of its listings persists.
This was a digestion week, and the composition is the tell. Last week's casualties found a floor: SGP (-0.2%), SCG (-0.6%), MGR (-0.6%) all stabilised and VCX (-2.1%) slowed markedly from its -6.7% week. The bounce went to GPT (+1.6%) and WBC (+1.6%) — the same defensive bank bid that held Friday a week ago. And the fortress finally cracked: GMG, the quality anchor that limited its damage to -2.3% last week, was the complex's worst performer at -4.8% on a flat index week. When the quality name is the laggard, the market is repricing the sector's discount rate rather than culling weak hands.
Cumulatively the complex has now given back 3–9% over two weeks — GMG -7.0%, SGP -7.5%, VCX -8.7%, MGR -4.9%, GPT -3.3%, CBA -5.0% — with no new domestic policy event. Friday's tape made the point cleanly: the complex fell 1.3–2.9% on a day the index closed flat. The local market is trading the RBA, not the Fed's relief rally.
Context
- ASX 200: 8731.2 on Friday, -0.1% on the day and -0.1% on the week — held the 8700s after the prior week's -2.9%
- AUD/USD: 0.7115 Friday close, -0.6% on the week — easing in line with the narrowed carry differential (AU–US policy spread +47bp, from +72bp)
- AU–US 10-year spread: +35bp (5.35% vs 5.00%)
- Fed funds effective: 3.88% (17 September, NY Fed) vs RBA cash 4.35%
- Next RBA: 28–29 September, decision 2:30pm AEST on Tuesday the 29th
- Next FOMC: late October (26–27 on the Fed's published calendar)
- Data vintage: AU yields are the RBA's last F2 print (16 September — the table runs a few days behind); equities are Friday's ASX close; the fed funds effective rate is 17 September; FX is Friday's close
Eva's Read
Last week's hinge was the FOMC. It resolved the boring way: the Fed delivered exactly what was priced, the US 10-year ended the week where it started, and no fresh duration shock was imported. That makes the domestic price action the whole story — and the AU 2-year wrote it. Adding 16bp to 4.999% in a week when the US long end went nowhere, and when the Fed's hike trimmed Australia's carry advantage, is a front end that has decoupled from the Fed and become a pure RBA-pricing instrument. At 65bp over cash it is not pricing a 25bp hike; it is pricing a 25bp hike plus follow-through.
The housing complex is in digestion, which is what a market does between the repricing and the event. The beaten-down names based, the banks kept their bid — and the quality anchor paid the catch-up tax. That rotation says the sector's discount rate is still being marked to a 5.00% 2-year, not to any single company's story. Nothing here required news; that is the point.
The 29th now resolves it. A hike with soft language is the relief path: the 2-year premium compresses toward cash+30bp and a complex that has pre-paid 3–9% gets its bounce. A hike with Warsh-style "timelier return" conviction extends the re-rate — the second leg, with the 2-year through 5.05% and the complex re-testing the August lows. And a hold would mean a 65bp premium is simply wrong — the unwind would be fast and the rip violent — but the 2-year is not entertaining that outcome as live.
The open question: whether the RBA matches not just the Fed's move but its shape — one hike now, another dotted for later. If the statement says one-and-pause, this complex has probably seen its low. If it says open-ended, the numbers in the table above are a waypoint, not a floor.
— Eva