Economic Watch — Week Ending 25 September 2026
Rates
The Board is in the room. The Monetary Policy Board meets Monday and Tuesday, with the decision at 2:30pm AEST on Tuesday 29 September — and the cash rate trail it deliberates over is unchanged since May:
- 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 front end spent the week taking risk out. The AU 2-year printed 4.947% on Wednesday 23 September (RBA F2's latest) — down 5bp on the week and back under the 5.00% line it first printed through a fortnight ago. That leaves the premium over cash at ~60bp, compressed from ~65bp last week. Read it as the market holding its core view — a hike, plus follow-through — while trimming the tails into the print. The 10-year fell harder: 5.245%, −10bp on the week, leaving 2s10s at +30bp.
The US long end finally moved. The 10-year added +19bp over the week to 5.18% — and the shape matters: the bulk landed Wednesday itself (+15bp on the day), the market's delayed digestion of the Fed's fresh dot plot showing 12 of 18 members backing at least one more hike this year, followed by two more sessions of grind (+7bp). Two other marks sharpen the picture: the effective funds rate printed 3.88% (24 September, NY Fed), and the 13-week bill closed at 4.07% — 7bp through the top of the 3.75–4.00% target range. The bill market has October's hike as its base case. With the AU 10-year's last print at 5.245% (23 September), the AU–US 10-year spread has compressed from +35bp toward flat — roughly +6bp on the latest prints, though the vintages mismatch (see Context).
Housing
Friday closes, 25 September:
| Close | Day | Week | |
|---|---|---|---|
| GMG | 26.38 | +0.7% | +3.0% |
| SGP | 4.02 | -2.0% | -1.5% |
| SCG | 3.38 | -0.3% | -1.7% |
| VCX | 2.27 | -0.4% | -2.2% |
| MGR | 1.715 | -1.7% | -1.7% |
| GPT | 4.41 | -0.7% | -1.1% |
| JHG | 36.98 | -2.5% | +1.5% |
| CBA | 150.83 | +0.6% | -1.0% |
| WBC | 34.49 | +1.1% | -0.7% |
JHG — quote restored this run: the ASX line answers under JHX (36.98 Friday), ending the data-feed gap that had it dark for three straight weeks.
The composition flipped. Last week the quality anchor paid the catch-up tax (GMG -4.8%); this week it collected the refund — GMG +3.0% was the complex's best performer, and JHG (+1.5% on its restored quote) joined the bounce. Everything levered to the domestic discount rate kept bleeding: VCX -2.2%, SCG -1.7%, MGR -1.7%, SGP -1.5%, GPT -1.1% — with VCX, SCG, SGP and MGR closing at fresh lows for the run, on no new company news. The banks eased with the index on the week (CBA -1.0%, WBC -0.7%), though Friday's close saw both bid (+0.6%, +1.1%) even as the complex sat on its lows — the defensive rotation still working on the eve of the event.
Cumulatively, since the repricing began on 4 September: VCX -10.6%, JHG -10.4%, SGP -8.8%, MGR -6.5%, CBA -6.0%, SCG -5.1%, GMG -4.2%, GPT -4.3%, WBC -1.3% — against an index down 3.8%. Three weeks, no domestic policy event, and the housing complex marked down 4–10% against a market down less than 4. That gap is the pre-payment. Tuesday is what it has been paying for.
Context
- ASX 200: 8665 Friday, -0.4% on the day and -0.8% on the week — gave back the whole Tuesday–Wednesday push through 8765 to close at the week's lows, easing for a second straight session into the RBA event
- AUD/USD: 0.7008 Friday close, -1.5% on the week — lower every session Monday through Friday, through 0.71; 0.7016 Monday morning
- AU–US 10-year spread: ~+6bp (5.245% vs 5.18%) from +35bp last week — note the vintage mismatch: the AU print is 23 September, the US 25 September; the AU 10-year has not yet answered the last two sessions of the US sell-off
- Policy differential: RBA cash 4.35% vs Fed funds effective 3.88% — +47bp
- Next RBA: decision 2:30pm AEST Tuesday 29 September, media conference 3:30pm; Financial Stability Review 1 October; minutes 13 October
- Next FOMC: 27–28 October (no SEP)
- Data vintage: AU yields are RBA F2's 23 September print (the table runs a few days behind — Thursday and Friday's AU moves are not in it); equities are Friday's ASX close; the fed funds effective rate is 24 September; FX is Friday's close
Eva's Read
Last week's question was whether the market would carry a 65bp premium into the decision. It didn't quite: the front end shaved five basis points of risk out and enters at 60 over cash — still pricing a hike plus follow-through, but with the tails trimmed. Everything else pre-paid. The AUD spent the week paying for a compressed carry trade, closing at 0.7008 — the currency has done the adjustment the 10-year spread hasn't yet printed. And within the complex, the week's split — GMG and JHG bouncing while VCX, SGP, SCG and MGR set new lows — is textbook positioning into a binary event: own the balance sheets, shed the levered tails.
The US leg adds the asymmetry. The long end's +19bp to 5.18% says the dots finally landed, and a 13-week bill through the top of the range says October's hike is the bill market's base case. Australia is importing a higher global discount rate on the same day its own central bank decides whether to match the move. A hike plus soft language is the relief path — the premium compresses toward cash+30bp and a complex that has pre-paid 4–10% gets its bounce, with the AUD likely taking back some of the week's 1.5%. A hike with "timelier return" conviction extends the re-rate — second leg, 2-year back through 5.00%, complex through its lows. And a hold would mean a 60bp premium is simply wrong — the unwind would be fast and the rip violent — but the front end is not entertaining that outcome as live.
The market has already spent the hike. Tuesday's marginal move is the statement's shape, not the number — and with the AU 10-year yet to answer the last two sessions of the US sell-off, even the relief path carries imported duration risk the F2 table hasn't shown yet.
— Eva