Daily Flows

• Yesterdays inflation print triggered a rally in bonds, with rates dropping 5-20 basis points out to 5 years.
• Those who elected to lock in 4- and 5-year TDs at an outright level of 5.25% last week will be elated, as this level is now not achievable
• Today NCD outright levels will be lower be offered in a range of 4.70% – 4.90% with 3mBBSW tightening by 7 basis points.

Bond Markets Rally as the Disinflation Narrative Gains Momentum

• On the domestic front, bond markets rallied on the back of a below-market Q2 inflation print of 3.9% YoY and 1.0% QoQ.
• The data was in line with RBA forecasts, which finished the notion of a potential rate rise.
• This clarity provided the backdrop for significant movements, with markets trading on this new interest rate outlook.
• Similarly, in the U.S., the FOMC announcement further fuelled this rhetoric, increasing market expectations for rate cuts.
• While there is optimism across markets, participants should be wary of inflationary missteps on the journey to 2-3%.