TD Securities: Strong Australian labour market raises risk of RBA May rate hike
TD Securities warns the Reserve Bank of Australia (RBA) faces heightened risk of a May rate hike as labour market tightness persists. Key indicators: unemployment at 3.7%, participation rate 67.1%, underemployment 6.3%, wage growth about 4.2% and core inflation near 3.8% y/y. TD assigns roughly a 40% probability to a May move, citing sticky service-sector prices, resilient hiring intentions and rising government bond yields and AUD sensitivity to policy bets. Risks that could offset a hike include weaker consumer spending, global shocks or financial-market stress. Sectoral impacts: housing and mortgage holders are most vulnerable to higher rates, small businesses face cost pressures, while exporters could benefit from currency shifts. TD and other analysts stress a finely balanced RBA decision, with markets to watch upcoming labour, inflation and consumption data closely for volatility around the May meeting.
Neutral
A potential RBA rate hike is mixed for crypto markets. Higher Australian rates (or stronger expectations) can strengthen AUD and lift yields, making risk assets relatively less attractive and pressuring speculative assets briefly — a mildly bearish short-term signal. However, the RBA decision is not directly tied to crypto fundamentals; global macro drivers (Fed policy, liquidity) play a larger role. Historically, local rate rises have produced short-lived volatility in crypto rather than sustained downtrends. If a May hike triggers broader risk-off sentiment or tighter global liquidity, crypto could face sharper selling. Conversely, if the RBA pauses later while inflation cools, risk appetite may recover. Therefore the immediate impact is likely limited and transient (neutral overall), but traders should expect increased volatility around Australian data releases and the May meeting and monitor shifts in global central bank guidance and bond yields for broader directional cues.