The Antipodean Strategist: Cash in, cash out

Research evidence excerpt

The Antipodean Strategist: Cash in, cash out

J P M O R G A N Global Markets Strategy

16 July 2026

The Antipodean Strategist

Cash in, cash out

• Surplus ES balances have moved sharply higher in the past month, interrupting Australian and New Zealand Interest

the well established downtrend and contributing to softer short dated FX-OIS. Rate Strategy

We find that temporary increases in surplus balances are common through June/ Ben K Jarman AC

July as government spending is increasingly funded by a drawdown in cash (61-2) 9003-7982

balances held in the Official Public Account. These dynamics usually reverse ben.k.jarman@jpmorgan.com

course around mid-July, so we think surplus ES balances are close to a local peak Tom Kennedy

and should continue to trend lower into the year-end. We retain our view that (61-2) 9003-7981

excess reserves will contract towards A$125 billion by the end of 2026, the lower tom.kennedy@jpmorgan.com

J.P. Morgan Securities Australia Limited

end of the equilibrium reserve demand range separately estimated by the RBA.

• While the timing is consistent with the past few years, the most recent increase

in surplus ES balances is larger than normal and, in our view, may relate to

upcoming ACGB issuance, with the 2038 Treasury bond due before 30

September. Since 2020, the government has maintained a larger OPA cash float

relative to the pre-COVID-19 average, oscillating between A$40 billion and A

$100 billion. Following recent drawdowns, balances are now close to range

lows, with the government potentially running down cash balances in

anticipation of upcoming issuance.

• In New Zealand, RBNZ Chief Economist Conway's speech skewed hawkish,

reiterating the Bank’s concerns around the inflation outlook and the need to keep

price expectations anchored.