- 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.