Daily Flows

• Yesterday, we saw a pick up in demand, with A-2/BBB+ banks offering 4.70-4.75% across 3-12 months.
• Those quick to act were able to capitalise on the limited demand.
• We also saw active Semi-Government trading across Fixed and Floating lines from 4-6 year terms.

Fed Downplays Tariff Inflation Impact

• The US FOMC held the Fed Funds rate steady overnight, as expected, marking the second consecutive meeting with no change.
• Chair Powell downplayed tariff-related inflation, calling the effects ‘transitory’.
• The Fed announced a further slowdown in its balance sheet reduction, signalling a more cautious approach to liquidity tightening.
• The core PCE inflation forecast for 2025 was revised up to 2.8% from 2.5%, while 2026 and 2027 projections remain unchanged at 2.2% and 2.0%, though the range of forecasts remains wide and tilted higher.
• US equities rallied and bond yields fell following the meeting, as markets interpreted the updates as slightly dovish.