Like I mentioned before, there is a great likelihood there will be no rate cut for big 4 customers. The risk factors are pretty simple to understand, but not that nice to think about if you want lower rates.
1. We had a gfc. 2. The government initiated a lot of stimulus spending that resulted in a massive credit spike. 3. Credit spike funded by banks selling bonds to OS investors. 4. OS investors scared about GFC, so maturity for bonds to be refinanced much shorter timeframe than usual (normally 5 to 10 years, average about 2.5 years instead. 5. Banks thought times would be better for os credit markets in 2.5 years from 2008. They really took a gamble there. If you print money to get out of trouble, you usually delay and worsen the eventual meltdown. Things are looking bad to worse for our banks being able to refinance this major spike in loans. 6. The Rba's cash rate has got nothing much to do with the cost of refinancing all of these bonds. Local savings are a drop in the ocean and cannot refinance these bonds. 7. Anyone who hopes a Japanese banking tsunami will save the market has never looked at the cost of hedging fx risk.
