Daily Flows
- Last Friday, we observed a term deposit flow towards AMP (A-2/BBB+), highlighted by a standout 10-month rate of 5.20%.
- Despite this, market participants were still able to secure bespoke offerings via Curve at rates of 5.25% and upwards.
- NCD margins remained at +40, with demand for funds from A-2 names returning to the market.
Markets Continue Risk Off Trading and The Week Ahead
- Last week, markets ended on a cautious note due to weaker-than-expected U.S. payroll data.
- The rising unemployment rate and payroll pace has fallen below the pre-pandemic average.
- Globally, there is a strong risk-off sentiment, with equities retracing and safe-haven assets rallying.
- While the banking holiday in NSW may lead to more dramatic price movements, in the interest rates space, the softer-than-expected inflation and risk-off sentiment have led to significant drops in the yield curve.
- The 1-year Aussie swaps rate has rallied from 4.40% down to 3.98% today.
- Looking ahead, the main event is the RBA meeting tomorrow, with business and consumer conditions data to be released later.
- While a hold is expected, clarity on the monetary outlook remains crucial for interest rate markets.
- Overseas, inflation data from China and the UK will also be closely watched.