Daily Flows

• Markets yesterday saw solid demand for a well-rated (A-1/A) name, offering value across 6-month and longer tenors — outperforming comparable high-credit rating options as 4.70% was the standout rate.
• NCD pricing continues to ease, with spreads narrowing toward +40bps over 3-month BBSW as demand stabilises following recent month-end flows.
• The short end of the yield curve remains compressed, with just ~3bps separating 3- and 6-month BBSW, reflecting steady liquidity conditions.

Markets Reassess Fed Outlook

• U.S. Treasury Secretary Bessent noted that 17 countries have submitted “very good” trade proposals, suggesting progress with China is possible in the coming weeks. Meanwhile, President Trump announced plans to impose 100% tariffs on foreign-made films, though key details remain unclear.
• Stronger-than-expected U.S. data supported a shift in Fed expectations. The ISM Services Index rose to 51.6 (vs. 50.2 expected), while the prices paid component hit a two-year high — reinforcing persistent services inflation.
• Alongside firm labour market data last Friday, this has led markets to scale back near-term Fed cut pricing, with U.S. 10-year yields rising 3bps to 4.35%.
• Locally, conditions were quiet. Australian 10-year yields are at 4.27% this morning, with a 25bp RBA cut still fully priced for May 20.
• Today’s focus is on Australia’s household spending indicator and the U.S. March trade balance.