- With a Tcorp floating stock maturing, market participants are seeking suitable replacements to roll funds.
- Semi-Government floaters are relatively rare in the market; however, TCV 28-29 offerings are available and have attracted significant flow.
- Due to volatile reference rates, there have been varying levels offered for term deposits at the longer end. 5.20% is the prevailing rate for 2-5 years, with an outlier at 5.35% also gaining some attention.
- NCD margins remain stable at +40 for 3 months. Those looking for higher margins have directed flow towards foreign branch banks.
Bond Sell-Off Eases, but Markets Remain Volatile
- This week has been marked by volatility, driven by U.S. data points that have led to significant price swings. Market participants are uncertain about short-term Fed interest rate expectations.
- The combination of the ADP jobs report and ISM services employment data supports the expectation that the trend of slowing job growth in Non-farm Payrolls (NFP) is continuing, which has helped ease the bond sell-off.
- Market sentiment is trying to determine whether central banks will or will not raise rates in the coming months.
- Despite supply cuts, oil prices have dropped by 5.6% to below $US85 a barrel, which is good news in the fight against inflation.
- Looking ahead, U.S. Non-farm Payrolls will hopefully provide an indication of the current labor market conditions and offer more clarity to central banks and the markets. It seems we are approaching a pivotal moment in the cycle.