Daily Flows
- We saw more rotation into major bank FRN paper yesterday with the 3 and 5 year tenors receiving flows as investors swapped into lower risk-weighted names.
- Opportunities for attractive yields in the A1 term deposit space remain today, with foreign branches paying 5.12% for 6 months and 5.18% for 12 months.
- A2/BBB+ names have popped up to plug funding gaps so far this week, with 5.15% for 6/9 months from several names being snapped up by investors.
More Jawboning to Round Out the Week As Officials Do the Rounds
- More Fed officials were rolled out on the speaking circuit overnight as jawboning efforts continued. The latest was vice chair Philip Jefferson, who emphasised the dangers of over-consumption amidst resilient consumer spending.
- Whilst expecting the central bank will start cutting interest rates at some stage this year, he cautioned that the disinflation process is likely to be “bumpy”.
- Treasurer Jim Chalmers appears to have changed his tone on the RBA and its new governor, promising Governor Michele Bullock that many of its existing board members will be reappointed to a new monetary policy committee as he emphasises the importance of continuity.
- A Senate hearing yesterday heard objections to last year’s recommendations, in the RBA’s independent review, that the Treasurer’s veto power over RBA decisions be removed. This “safety valve” was crucial to retaining the elected government’s power over the central bank, the hearing heard.