Daily Flows

• Reference rates have shown lower volatility towards the end of the week.
• Currently, the Aussie Swaps curve stands at 4.25% to 4.30% for 1 to 3 years, with the 5-year rate at 4.53%.
• Flow has been directed toward 1-year, where outright TD levels have reached 5.30%.
• Some NCD flow persists in longer durations as market participants seek to capitalise on any remaining yield differentials between 3 and 6-month rates.

Australian Trade Surplus Widens

• Australia’s trade surplus expanded to $9.64 billion yesterday, surpassing market expectations and exceeding the previous month’s $7.32 billion.
• Exports registered a 4% growth, while imports declined by -0.4%.
• The surge in exports was primarily fuelled by ores and minerals, driven by increased demand from China.
• Import growth was attributed to fuel and lubricants, reflecting the impact of higher international oil prices.
• Despite robust trade between China and Australia, China’s housing crisis remains a point of concern for future demand.

Markets Await U.S. Non-Farm Payrolls

• The U.S. Non-Farm Payrolls report is scheduled for release tonight, with expectations of a 170,000 job increase.
• Over the last three months, NFPs have shown a declining trend since Q1, and the ADP report suggests a potential slowdown in hiring this month.
• The stronger-than-expected JOLTs data has made markets cautious, as it hints at the possibility of a robust NFP print.
• If the results align with the forecasts of 150,000 jobs, the data would indicate a gradual easing of labor market tightness, offering relief to the Federal Reserve in their efforts to curb inflation.