Daily Insights

Suncorp’s bond issuance on Wednesday has seen significant secondary market trading.
Today, there is opportunity to pick up the A+ rated 3 year floating bond with an attractive trading margin.
TD demand for funds is picking up in the BBB/BBB+ space. Levels of 5.00% for 6 months and 4.90% for 1 year are being snapped up by market participants.
The NCD market continues to have a bid tone, with +45 being offered for 3 months as well as an introductory special of +50 for 2/3 months.

We saw another central bank rate hike for May last night with the Bank of England hiking by 25bp, taking their overnight rate to 4.50%
They also upgraded the growth outlook from a recession to 0.25% this year.
Despite the bleak outlook on growth, the unemployment rate is near a record low of 3.8%, slightly above the current rate of unemployment here in Australia.
The major difference for the BoE is that wages are growing at 6.6%, almost double the rate in Australia making the central banks challenge even greater.

Following the Bank of England’s rate hike overnight, the market no longer has any further rate hikes fully priced for the next run of central bank meetings.
That list included the US Fed, Bank of Canada, Reserve Bank of New Zealand, European Central Bank, Bank of England and of course the RBA.
Of that list, the market has the US Fed, Bank of Canada and the RBA all in a holding pattern with rate cuts on the horizon.
Meanwhile market expectations are that we will see a little more from the Bank of England, European Central Bank and Reserve Bank of New Zealand before they too enter a holding pattern.
Of course, market pricing isn’t always right and if inflation remains elevated then this outlook could quickly change.
For now, though, it appears as if we are entering a new phase for monetary policy globally.

Share this entry

Curve Team

David Flanagan