- The TD market enjoyed a healthy supply of funds yesterday that was placed across the BBB space.
- With many ADIs on the bid, market participants were able to diversify their investments, whilst also locking in competitive yields of 5.70% for 6 months.
- There a signs of liquidity tightness easing in the market which is reflected in increased NCD activity.
- 3 month Margins are still on offer at +50 for new funds.
China Deflation Risk
- Yesterday, Chinas inflation rate was 0% YoY with a -0.2%MoM for the month of June.
- Producer prices dropped by 5.4% YoY for June 2023 reflecting the weakened demand and moderating commodity prices.
- The timing and style of China’s COVID recovery is starkly different to Australia and the rest of the world.
- This print increases expectations that policy makers may need to be more proactive in an attempt to increase demand.
- Continued Chinese weakened demand presents risk to Australian export prices.
- A sliver lining is that weakened Chinese demand has a dampening effect on global goods inflation.