The RBA decision was a huge surprise to the bond market. The market was betting there was a 0% probability of a rise. This has never occurred before.

Mr Lowe Said:

"The Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3 per cent target range, but the path to achieving a soft landing remains a narrow one. The central forecast is for the economy to continue growing, albeit at a below-trend pace; GDP is forecast to increase by 1¼ per cent this year and around 2 per cent over the year to mid-2025. Given the expected below-trend growth in the economy, the unemployment rate is forecast to increase gradually to be around 4½ per cent in mid-2025."

The RBA will never provide guidance of an impending recession, but I am not sure it is possible to achieve a 1% rise in unemployment without having a recession in the process.

@SaberX , the thing about an RBA pivot (i.e. cutting rates), is that something very bad will have to happen to induce such rate cutting.

IMO, great buying opportunities are likely still ahead, but it is going to take great patience and discipline to stay on the sidelines (or get some $$$ on the sidelines).

Or just watch the ones holding up on the news?

I noticed JLG went up.

Not saying you should buy though but understand the thesis behind the price resilience.

Neither the bond market nor surveyed economists expected this. Then again they look at the data. I think that the data was borderline at best & leaning towards no cut. Whereas if you think about Lowe's motivation as being to keep his job and salvage what remains of his legacy then it's in his interest to show that he's nobody's bitch. So - raise !

Unfortunately this increases the recession likelihood significantly. The interest rate burden will now just be too high to steer the path he purportedly seeks.

@Rapstar I did find it interesting the bond market had a 0% chance of a rise given recent house price rises over east released prior to the meeting. I think stopping in April was what threw the market off. I dont know if a recession occurring would be the catalyst but agreed that to raise the unemployment rate and in turn lower inflation that growth has to take a hit somehow. I'm still of two minds of long term investing and not timing the market, yet the overall shadow of growth taking a hit indicating that patience may yield lower share prices overall regardless of company specifics merely as a result of higher interest rates lowering DCF valuations etc. And the market discount growth.

I wouldn't be surprised that a rate cut pivot could occur just as fast , after all nobody thought the rise would be so sharp. I wouldn't rule it out, but hence why I was curious how others are dealing with the rates uncertainty. Are most simply trying to ignore rates as a part of their valuations and just building a larger margin of safety and just investing and making peace to not time the market?

Even being comfortably ahead of my mortgage I struggle to understand how all the buy and leverage property holders will get over the fiscal cliff coming up. Our fixed rate was at 1.89% and it's crazy that it will nearly triple come oct-nov (at the time I think a 3 yr fixed was like 2.07 or something - my spreadsheet missed calculated as rates were so low the savings weren't apparent so I went with 2 yrs for flexibility. So kicking myself now) Thankfully I fixed for 2 years right before fixed rates started adjusting upwards. But just thinking of it tripling come November makes me wonder how all the retail holders leveraging portfolio will go. I think the saving grace holding it all together at least in WA is rentals are all filled... So demand is keeping rental income robust.