25 March, 2025

Daily Flows

• As we approach quarter-end, market participants should watch for bespoke offerings, as ADIs look to meet liquidity targets.
• Yesterday, we saw this trend play out, with a domestic non-fossil fuel A-2/BBB+ ADI attracting significant flow.
• Today, similar opportunities remain available across both NCDs and term deposits.

Australian PMI Reflects a Pick-Up in Business Activity

• Australian business activity accelerated in March, with the S&P Global Flash Composite PMI rising to 51.3, its highest level since August, as both manufacturing and services output improved.
• New business orders rose at the fastest pace in nearly three years, driven by robust domestic demand, while export orders declined for the sixth time in seven months due to elevated costs, global uncertainty, and weather-related disruptions.
• Staffing levels increased for the third straight month, with strong hiring in the services sector, while backlogs of work rose for the first time since mid-2022, suggesting capacity pressures are emerging.
• Despite rising cost pressures, output price inflation eased to a four-month low, as firms absorbed more costs to remain competitive in an increasingly tight market.
• The pickup in activity and rising input costs could indicate underlying inflationary pressure, but with businesses reluctant to pass on costs, the data supports the RBA’s patient stance on rate cuts and reinforces a flattening bias at the front end of the yield curve, as markets balance soft global demand with domestic resilience.