Daily Flows & Insights – Markets Hold Their Breath For Inflation & FOMC Meeting

Daily Flows

  • 3 month TDs have lowered in the BBB space, with 5.25% being the standout level and 5.10% the market level.
  • In light of this, 6 month TDs attracted significant flow, with market participants picking up 5.55%.
  • NCD 3 month margins remain at +45 for domestics with foreign banks having to price higher to attract.

Markets Hold Their Breath For Inflation & FOMC Meeting

  • Today markets are poised for domestic CPI & the US FOMC meeting.
  • The market is forecasting 6.3% YoY and a trimmed mean CPI of 1.1% QoQ.
  • Currently markets are pricing in a 55% chance of a 25 basis point hike come August.
  • This print will hopefully provide further clarity unto the current battle against inflation.
  • If the print comes in softer than their May forecasts, this could prompt a pause.
  • The Fed also meets tomorrow morning to make a decision on monetary policy.
  • Markets are forecasting a 25 basis point hike.
  • The accompanying statement by Fed Chair Powell will be listened to closely.
  • It is expected that he will be hawkish, making it clear that fed funds will be elevated for a sustained period and avoid price setting behaviour by markets and consumers.
  • This is especially the case with rising consumer confidence printing yesterday.
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Curve Team
Jack Pedersen