Daily Flows & Insights – Bond Sell-Off Eases, but Markets Remain Volatile

Daily Flows

  • 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.
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Curve Team
Jack Pedersen