Is it Impossible to be Dovish?

Two of the more interesting central bank meetings this month have been the RBA in Australia and the Riksbank in Sweden. Both central banks have been dovish holdouts in this global shift towards tightening. Until recently, the RBA had fairly explicit date based guidance in terms of not raising rates until at least 2023. The Riksbank, while not explicitly in guidance terms, does not expect to lift its policy rate until 2024. In both of their respective meetings, the RBA and Riksbank found the current market pricing for their respective lift offs to be a bit premature, and yet in both bond markets the front end has continued to rise in yield.

Over the last month:

• SEK 2y swap rate is up 33bps

• AUD 2y swap rate is up 28bps

The market doesn’t seem to care what about what either Ingves (Riksbank) nor Lowe (RBA) are saying right now, and the question is why?