Daily Flows

• Term deposit levels remain elevated heading into end of year with 12 month levels approaching 5.35%.
  
• 3 month NCD levels of +60, along with outright 6 month levels at 5.20%, represent attractive relative value for investors.
• We are continuing to see semi-government FRNs available for those ADIs looking to snap up zero-risk weight securities before June 30, with a QTC 2030 line attracting particular interest.

May Inflation May Inflate Hike Expectations

• May CPI is due out later this morning with consensus expectations of a 3.8% annual increase, which would be the highest level since November 2023.
  
• Stronger inflation would mimic Canadian conditions in inflation data released overnight, which had a large upside surprise – printing at 2.9% YoY on expectations of a 2.6% rise, as price pressures remain resilient across Western economies.
  
• Housing and insurance prices are tipped to lead the upward charge, with middling food & fuel prices weighing inflation down.
  
• The primary focus for the RBA will be second quarter inflation out on 31st July along with monthly inflation for June. The central bank has a week to digest these prints before they meet August 6th.