Daily Flows & Insights – Cash Rate Unchanged as Australian Economy Treads the “Narrow Path”

Daily Flows

  • Newcastle Greater Mutual has launched a 5 year MTN today, with price guidance in the +190-195bps area. Strong IOIs submitted yesterday already exceed $710m a few minutes after the launch.
  • Clients with maturities in the 5 year ANZ FRN and NSW T-corp fixed line, both maturing tomorrow, have been rolling into major bank paper & fixed semis so far this week, with opportunities again today.
  • NCD margins remain at the +45 area with A2 names also popping up chasing funds at the 12 month mark, with rates of up to 5.15% for investors who can take advantage of these opportunities when they appear.

Cash Rate Unchanged as Australian Economy Treads the “Narrow Path”

  • The RBA kept the cash rate at 4.35% in the first meeting of 2024 yesterday but showed a mild tightening bias in their statement of monetary policy.
  • Despite progress in curbing goods inflation, services inflation remains a key point of concern for the central bank, which refused to guarantee the next rates move would be down.
  • The RBA’s central forecast assumed at least one cut in the back half of 2024 and Governor Michele Bullock wants to be convinced inflation is trending sustainably back towards the 2-3% target range before any decrease in the cash rate – projected to be late 2025.
  • Despite price easing in the December quarter, with lower quarterly and annual inflation change, Australian 4Q retail sales beat expectations with growth of 0.3% against expectations of 0.1%.
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Curve Team
Josiah Binet