- 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.