Daily Flows

• Yesterday, a BBB+ domestic bank entered the market with elevated 6-8 month term deposit rates. This bank currently has no direct exposure to the fossil fuel industry and is classified as an ESG investment by most market participants’ investment policies.
• Suncorp’s 5-year launch was priced at 3mBBSW + 98 yesterday, attracting $1.25 billion across the fixed and floating tranche.
• NCD margins continue to be offered at +45 for 3 months and +50 for 6 months. There is a strong bid tone in the market, with banks chasing funds.

U.S. Inflation Slightly Hotter Than Expected

• Last night, U.S. inflation was slightly hotter than expected at 0.4% MoM and 3.8% YoY.
• While prices softened for recreation and personal care, they continued to rise notably for motor vehicle insurance and medical care. Monthly core consumer prices rose by 0.4% in February, meeting market expectations.
• While the monthly figure was rounded up from 0.36% to 0.4%, making it appear stronger than it was, there are still concerns over the stickiness of inflation as the U.S. economy remains resilient. Markets are pricing in a 90% chance for the Fed to remain on hold in May.

Business Conditions Improve But Price Pressures Remain

• The NAB business confidence index decreased to 0 in February 2024 from 1 in January, below the long-run average.
• Business conditions improved, surpassing their average, with sales and profitability on the rise and employment growth continuing.
• Retail price growth surged to 1.4% quarterly, indicating that inflation challenges persist.
• Similar to the U.S., the RBA will take the cautious route and wait for clear indications of easing price pressures before cutting interest rates.