Daily Flows

• The yield curve continues to fall, with credit spreads widening and yields dropping significantly.
• Momentum in the decline remains, with equities continuing to sell off today.
• Market participants will need to recalibrate expectations on pricing and offers in today’s session.

Markets Maintain Risk-Off Sentiment

• The risk-off sentiment has intensified post “Liberation Day”, triggering sharp falls in the AUD, Australian equities, and U.S. stock markets.
• At the time of writing, reference rates across the 1–5 year part of the curve have fallen 60–100 basis points over the past week.
• Current pricing levels: 3-month BBSW at 4.02%, 6-month BBSW at 4.13%, 1-year swaps at 3.35%, 3-year at 3.23%, and 5-year at 3.60%.
• This market turmoil has led to a significant repricing of interest rate expectations, with 100 basis points of RBA cuts now priced in for the calendar year.
• It’s little surprise the RBA has maintained a cautious stance, opting to observe global developments before committing to a clear monetary policy path.
• Looking ahead, participants should remain alert to shifting levels and evolving sentiment in both domestic and global markets.