Daily Flows
- Hotter-than-expected monthly CPI data saw the 5-year swap rates climb to 4.43%, and term deposits pricing 100 basis points wider. It has since slowly retraced and is now sitting at 4.32%.
- Even with this decline, 5-year TDs are still being offered at levels of 5.40% and have unsurprisingly gained significant flow.
- In the NCD space, margins may come in slightly as liquidity has returned to the market.
Markets Quiet Ahead of Powell Testimony and U.S. CPI Data
- There were no significant data points yesterday to move markets, with all focus on Fed Chair Powell’s Senate appearance tonight and June CPI data release on Thursday night.
- In Europe, bond yields tightened as market participants reacted positively to election results.
- In the U.S., consumer inflation expectations dropped to 3% for the month of June, marking a consecutive monthly decline.
- This trend was echoed by the Michigan Consumer Sentiment Survey and the Conference Board, both showing similar declines.
- Powell’s words will be closely watched by markets to see if the recent softening of data will prompt him to reveal a more dovish monetary outlook.