Daily Flows & Insights – China Deflation and U.S. Hawkish Sentiment Pre Inflation Print

Daily Flows

  • Activity was quiet yesterday with the NSW banking holiday.
  • Most TD flow was directed to the 9 month tenor where outright levels peak at 5.30%.
  • To attract funding today, a green-friendly BBB+ ADI has come to market with +50 for 3-6 months NCDs.

China Deflation and U.S. Hawkish Sentiment Pre Inflation Print

  • There was no significant data points for the market to trade off yesterday.
  • Looking forward, China and U.S both have their inflation prints for the month of July.
  • Economists are expecting a deflationary print of -0.3%. Additionally, their imports and exports are expected to fall later today.
  • A slow down in China’s economic activity will serve as a global disinflationary force in the goods market.
  • U.S. inflation is released on Thursday night, with markets expecting a MoM reading of 0.2%.
  • Overnight, hawkish Fed speak by Bowman saw markets react and longer treasury yields sell off.
  • A tight labour market continues to be a source of concern for the Fed.
  • The inflation print will hopefully reveal the extent to which this may be feeding into prices.
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Curve Team
Jack Pedersen