Daily Flows

• AMP (A-2/BBB+) continues to attract flows with above-market levels. In particular, 5.10% for 12 months was the flavour of the day.
• In the BBB domestic NCD space, +55 for 3 months was offered to bring funds in quickly.
• Banks are favouring the rollover of funds as we head into Christmas, avoiding the extra operational burden of replacing with new funds.

Fed’s Adjusted Monetary Policy Outlook Spooks Markets

• The Fed has cut interest rates as expected but reduced the number of expected cuts next year by half.
• Data suggests a tilt towards higher inflation risks, with officials expressing less confidence in the speed of policy easing; one official dissented on the rate cut.
• Projections for 2025 indicate a stronger-than-expected US economy, with higher growth and lower unemployment forecasts.
• Following this, equities fell sharply, short-term bond yields spiked over 10bps, and the USD surged.
• The Fed sees balanced risks ahead, emphasising the need for continued progress on inflation.
• So far, the Fed has navigated the inflation fight with relatively few speed bumps. Its cautious approach of slowing down when uncertainty looms may prove to be a rewarding strategy in the long term for the U.S. and the global economy.