Daily Flows

• We saw a number of A2/A3 banks chasing funds towards the back end of last week, with more on the lookout again today as council rates money starts to flow into the system.
• A1 foreign branch banks still represent good relative value with margins at +50 for 3 month NCDs again this morning. Domestic margins started to creep up last week with +45 available from A2 issuers.
• Investors with limit available for unrated names can expect attractive TD rates this week as several banks come to market to fill funding gaps.

The Week Ahead

• Australian GDP prints on Wednesday, the first time under the new RBA meeting structure that this has not followed an interest rate decision the day before.
• Economists project an increase of 0.3% QoQ for the December quarter but a decline on a per capita basis for the fourth consecutive quarter, with expectations this trend will continue as the impact of higher interest rates continue to dampen household demand.
• We are also tipped to see a fall from 2.1% to 1.4% on an annualised basis amidst slower consumer spending, reflected in falling residential construction.
• US Non-Farm Payrolls are also tipped to have cooled in February, with expectations of 200,000 new jobs created last month – almost half the number created in January.
• Expectations remain for a first cut at either the June or July meeting of the US Fed, with four cuts by the start of next year. Domestically, markets project a first RBA cut in September but don’t expect a second cut before the end of the year.