Daily Flows & Insights – Moody’s Downgrade & The Week Ahead

Daily Flows

  • On Friday, Police Bank issued $65 million of a 3-year floating MTN at a discount margin of +155.
  • Investors favoring the short end of the curve have been able to pick up 5.10% for 3 months from environmentally friendly (Green-Friendly) names.
  • Those sitting on cash should look to place funds before mid-month, as cyclical inflows tend to quash excess demand and dampen outright TD and NCD levels.

Moody’s Downgrade

  • Moody’s Investors Service signaled a potential downgrade of the US credit rating due to wider budget deficits and increased political polarisation.
  • Fiscal deficits are expected to remain large, significantly weakening debt affordability, especially if measures to reduce spending or boost revenue are not implemented.
  • Moody’s is the only major credit rating agency with a top rating for the US, as Fitch Ratings downgraded the government in August.

The Week Ahead

  • This morning, Marion Kohler, Acting Assistant Governor of the RBA, speaks at the UBS Australasia Conference.
  • On Tuesday, Consumer confidence and business conditions are released to the market. The November rate hike may feed into confidence levels, reversing recent upward trends.
  • The main event of the week will be domestic wages and jobs data. The central bank now predicts the unemployment rate to average 3.8 percent in the fourth quarter.
  • In the U.S., CPI is released near the back end of the week. The markets are forecasting a rise of 0.3% MoM with stable energy prices, declines in vehicle prices, and dampened consumer demand expected to influence the print.
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Curve Team
Jack Pedersen