Daily Flows

• Multiple ADIs entered the market seeking funds on the last day of the month.
• Investors with available funds were rewarded with a 5.50% interest rate for 12-month term deposits.
• NCD margins rose to +55 as those pursuing funds had to outbid market levels.

Positive Signs from US PCE

• In the U.S., the core personal consumption expenditure index increased by 2.3% QoQ, showing a decrease from 3.7% in Q2.
• This data suggests that the ‘soft landing’ targeted by Central Banks might be achievable.
• Inflation is aligning with expectations, and there are no significant cracks appearing in the U.S. economy.
• The Fed will maintain a hawkish stance to prevent market-induced price-setting behaviour, ensuring less restrictive financial conditions.

Euro Inflation Continues Downward Trend

• The Euro’s annual inflation dropped to 2.4% YoY, reaching the lowest point since April 2022 and falling below the forecasted 3.9%.
• Inflation rates eased across various sectors: Services at 4.0% (vs 4.6%), Food, alcohol, and tobacco at 6.9% (vs 7.4%), and Non-energy industrial goods at 2.9% (vs 3.5%).
• It is now evident that we have entered a global deflationary period, prompting questions about the timing and the state of the economy as inflation decreases.
• Markets are shifting their focus to rate cuts and the overall strength of the economy.