Daily Flows & Insights – Business Sector Resilience Continues

Daily Flows

  • Recent publications by the RBA indicate that the domestic banking system is well positioned with strong capital ratios and profits.
  • With this in mind, more flow may be directed across the banking system as market participants can confidently place funds.
  • Recent offerings by unrated and BBB- ADI’ have seen some lock in elevated returns of 4.50% for 3 months.
  • A BBB name continues to standout at the longer end of the curve with a limited rate of 5.05% for 1 year.

Business Sector Resilience Continues

  • Yesterday’s monthly business survey showed continued resilience in business conditions despite tighter financial conditions.
  • The index remained well above long run expectations at 14 with trading conditions, profitability and the employment index all still solid.
  • While labour costs remained unchanged from a month earlier, purchase costs were higher.
  • Margin squeeze saw final producer prices down along with retail prices which fell again.
  • The continued strength in business conditions is at odd with business confidence which remains soft.
  • Despite the index edging up 1 point to 0, it remains well below long run averages.
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Curve Team
David Flanagan