Daily Flows & Insights – Debt Ceiling Agreed Upon, Still Hurdles Ahead

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.
Share this entry
Curve Team
Jack Pedersen