Daily Flows

• Short-term deposits continue to offer great value, with Heartland Bank’s 3-month term deposit at 4.70% remaining a standout against a flatter reference rate backdrop.
• Pricing in the NCD market is gradually easing, with levels moving from +45bps toward +40bps over BBSW, as demand moderates.
• Following recent volatility and April holiday disruptions, a pickup in primary issuance is expected as ADIs seek funding, presenting renewed opportunities for investors across the curve.

ISM Manufacturing Beats Expectations, Yields Rise

• The April ISM Manufacturing index fell to 48.7 from 49.0, marking a second month of contraction but coming in above expectations (47.9), with mixed details across new orders and employment.
• Bond yields moved higher following the release, with the U.S. 10-year Treasury yield rising 4bps to 4.22% as the data suggested slightly more resilience in the sector.
• The ISM data triggered a shift in market expectations, with the OIS market now pricing in 91bps of Fed rate cuts this year, down from 101bps earlier in the week.
• Looking ahead, Australia’s Producer Price Index (PPI) and Retail Sales data will be in focus today, while in the U.S., the non-farm payrolls report will be closely watched for the state of the US labour market.