5-year Aussie swaps ended last week at 4.78%, peaked at 4.96%, and have now dropped to 4.73%.
Today, term deposit offerings of 5.70% for a 5 year tenor reflect relative value as the outright level remains the same but margins over reference rates have widened considerably.
NCD margins remain at +45, with a bid tone persisting in the market.
Markets Rally with Positive Central Bank Risk Sentiment
Equities in Europe and the U.S. rallied strongly overnight with both the BoE and the Fed keeping rates unchanged.
While Powell made it clear that monetary policy will remain restrictive, markets surged with confidence due to the notion that rates in the U.S. and Europe have peaked.
The U.S. 10-year yield rallied by 13 basis points, and the Dow Jones Industrial Average rose by 1.70%.
WTI oil has dropped to $80 as markets take the view that the risk of economic consequences spreading is less severe than headlines indicate.
This rally in bond markets follows a period of significant volatility when both U.S. and Australian 10-year yields were close to 5.00%.
If this does indeed mark the peak of U.S. rate hikes, it may lead to yield curves stabilising and less uncertainty in the market.