Daily Flows & Insights – Consumer Concerns Over Inflation Heightens Post Budget

Daily Flows

  • Yesterday, flow was directed to Tcorp 20/04/2027 floating bond with attractive offerings available.
  • With reference rates retracing from last week, there is less disparity between market offerings. Term deposit offerings are centralised around 5.20% for 6-12 months.
  • A domestic A-2/BBB bank is offering +55 for 3 month NCD today.

Consumer Concerns Over Inflation Heightens Post Budget

  • The Westpac Consumer Sentiment Index dropped by 0.3% to 82.2, remaining well below the average of 100.6.
  • While expectations improved slightly in May, current conditions deteriorated further, with fears of persistent high inflation and potential interest rate rises.
  • Sentiment dropped significantly from 86.8 pre-Budget to 76.6 post-Budget, showing an 11.8% decline, indicating consumer disappointment more with the economic context than the Budget content.
  • The main driver of renewed rate rise fears was the higher-than-expected March quarter inflation and vigilant inflation-fighting rhetoric from the RBA Governor.
  • The consumer seems well aware to the potential upside risks of inflation and its lasting negative impacts it can have. With saving reserves running thin it is no surprise the ‘higher for longer’ narrative has dampened the mood.
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Curve Team
Jack Pedersen