Daily Flows
- Multiple green-friendly A-2/BBB+ banks were in the market yesterday, with 4.40% for 6 months leading the way.
- We also saw strong interest in 5-year TD’s, with an A-rated bank offering 4.58%, as councils continue to lock in ahead of expected rate cuts.
- NCD flow is expected to lift today, with one domestic name offering +45 over 3m BBSW. Other issuers may look to come in at +40, but it will be a wait-and-see as the market evolves.
Consumer Momentum Shows Fresh Weakness
- In Australia, retail trade rose just 0.2% in May, below expectations of 0.5%, leaving the annual growth rate at 3.3%.
- Retail sales, often volatile, will be discontinued after next month. Friday’s Household Spending Indicator will offer a more complete read on consumer momentum.
- The weak result keeps the RBA on alert to the risk that consumption continues to underperform even its downgraded May forecast.
- Globally, Trump announced a trade deal with Vietnam (20% tariffs on Vietnamese goods, 40% on transshipments), while UK gilt yields surged 16bps to 4.61% on fiscal concerns.
- US non-farm payrolls data headlines tonight, with the unemployment rate expected to hold near 4.3%. Markets will close early for Independence Day.
