Daily Flows & Insights – Base Effect Makes for Interesting Inflation Print

Daily Flows

  • There was heightened activity as market participants look to set their position for the month.
  • Bespoke offerings continue to present themselves to the market as the system wide demand for funds continue.
  • A stand out is a 1 year TD rate of 5.20% from a BBB ADI.
  • NCD margins are creeping upwards, with a few banks coming to market with +50 to attract 3 month NCD funds.

Base Effect Makes For Interesting Inflation Print

  • The monthly Consumer Price Index came in at 6.8% Y/Y for April 2023, 0.5% higher than economists consensus.
  • This was an increase from the previous print of 6.3%Y/Y, which marked the lowest inflation level for 10 months.
  • Fuel prices fell by 15% in April 2022, however this April, rising petrol and seasonally high travel costs added significantly to accelerating this months print.
  • Looking forward, both of these inputs fall substantially in the next print, suggesting a fall in CPI for May and June.
  • Although the pace of inflation seems to slowing, the RBA will still be wary of rental growth and services inflation remaining sticky.
  • Currently the market is pricing in a 25% chance of a hike come June.
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Curve Team
Jack Pedersen