Daily Flows

• May flows have been steady, with liquidity-driven activity continuing ahead of EOFY. Heartland Bank remains a standout, attracting demand with market-leading short-term rates.
• NCD interest has shifted toward foreign branches, where pricing remains attractive at +50bps over 3-month BBSW — offering a premium over domestic issuers.
• Credit spreads remain stable across the curve, supported by steady demand and little repricing pressure from recent data prints.

Market Eye Fed Decision

• Australia’s Labor government was re-elected over the weekend with an increased majority. The result is expected to have minimal market impact and won’t alter the RBA’s outlook.
• Retail sales for the quarter rose 0.3%, but volumes were flat, indicating consumer caution persists following Q4’s sales-driven lift.
• The U.S. labour market report beat expectations, with non-farm payrolls rising by 177k in April (vs. 138k forecast), while the unemployment rate held at 4.2%.
• Stronger labour data and easing trade tensions lifted sentiment, pushing U.S. 10-year Treasury yields up 8bps to 4.31% as markets scaled back Fed rate cut expectations.
• The domestic data calendar is quiet this week, with focus turning to Wednesday’s FOMC meeting, where the Fed is expected to hold rates steady amid slower growth and sticky inflation.