Daily Flows

• Yesterday saw strong flows into several A2 issuers with standout rates at the 12 month tenor.
• Several banks are targeting inflows in the next week with special rates today from an A2/BBB bank, indicatively at 5.30% (6 months) and 5.40% (12 months).
• The number of issuers offering +55 NCD margins has slowed over the week, with today marking a good chance to lock in these attractive rates from those banks still showing them.

RBA Releases Revised Statement on Conduct of Monetary Policy 

• The RBA has this morning released its first Statement on the Conduct of Monetary Policy since 2016, reiterating its CPI target of 2-3% and committing to regularly communicate its labour market assessment. The Government will focus on “sustained and inclusive” full employment – new qualifiers added in this Statement – which is the current maximum level of employment consistent with low and stable inflation. The RBA’s priority will be full employment assuming inflation, the primary objective, is in check, which marks a slight tweak to its dual mandate.
• Where inflation significantly deviates from the targeted midpoint of 2-3%, or labour market conditions notably deviate from full employment levels, the RBA will communicate how long it will be before it meets its objectives, and why, marking a commitment to clear communication.
• Expectations for future RBA cuts appear to have been cemented, with markets pricing in a cut in late Q3 or early Q4. Almost 1.5 cuts are now expected by December 2024. Investors should keep an eye on the longer end of the curve heading into Christmas as lower market rates begin to feed into pricing, with now marking a prime opportunity to lock in stronger rates for longer tenors.