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.