Daily Flows

• Today, AMP have launched a 3 Yr floating rate bond at an initial price guidance of 3M BBSW +165.
• This is an outright level of 5.93% for the first coupon.
• As AMP receive funds from this issuance, this may see downward pressure placed on their Wholesale Term Deposit rates.
• Market participants keen to lock in elevated 1-5 year TD rates from the BBB space will need to act quickly as this opportunity may subside.
• NCD margins are holding steady at +50 with enough demand to warrant it. However, the NCD market has definitely calmed.

RBA Decision More Finely Balanced Than Expected

• Yesterdays RBA minutes took the markets off guard slightly, as the prevailing tone was less hawkish than expected.
• The minutes revealed the decision to raise the cash rate again was a closer call than expected with the minutes referring to the decision as ‘finely balanced’.
• To note, there was the removal of the phrase “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame.”
• In response to the above sentiment, interest rate markets from 1-5 years rallied 10 basis points.
• Market participants should be weary as we near the end of the rate hike cycle.
• Elevated opportunities in the longer terms will quickly disappear as markets recalibrate incoming data and sentiment.