Daily Flows
- The TD space saw considerable flow to longer tenors.
- Investors took a barbell strategy approach, locking in 2-5 Year TDs at a level of 5.10% (5.20% for 1 year) in the BBB space.
- At the shorter end, offerings upwards of 4.60% from an A+ rated ADI complimented the longer placements.
- With demand across the banking system, NCD margins remain at an +45 level to retain funds.
Domestic Retail Sales
- Last Friday Retails sales came in unchanged for the month of April at $35.3Bill, following on from a 0.4% climb in March.
- Spending was driven by increases in winter clothing purchases but was offset by less expenditure on discretionary goods as cost-of-living pressures remain.
- Whilst retail sales are still above their pre-covid levels, this figure is distorted by rise in prices.
- Looking at the nominal figure, retail sales are essentially unchanged from September 2022.
- This indication of consumers demand dampening will support holding the cash rate come June interest rate decision.
Debt Ceiling Agreed Upon, Still Hurdles Ahead
- President Biden and House Speaker McCarthy have an agreed to debt-ceiling terms over the weekend.
- The deal now has to pass the House and Senate before the cut-off of June 5th.
- Both Biden and McCarthy sounded optimistic however, markets should be weary that Senate lawmakers can force procedural votes, holding up the bill.
- With U.S. markets off for Memorial Day, it will be hard to get a clear picture on the extent of the markets response.
