Daily Flows

• Term Funding Facility repayments have created strong deposit demand among our ADIs looking to fund their repayments by the end of June.
  
• NCD levels remain elevated at +55 with potential opportunities for +60 this week as banks chase 3-6 month funds.
• Today’s ANZ primary issue in the 3 and 5 year fixed and floating lines provides an opportunity for investors looking to switch out of the NAB notes maturing early next week.

More jobs, higher unemployment, as May numbers spark sell-off

• Friday’s non-farm payroll numbers had the US adding 272,000 new jobs in May, 92,000 more than projected by economists, with healthcare, government, and hospitality sectors leading the charge.
  
• Despite this headline strength and the giddy sell-off that followed as the US 10 year added 15bps on Friday, the May unemployment rate of 4.0% – the highest since January 2022 – suggested underlying weakness in the labour market.
  
• Looking ahead this week, Australian unemployment on Thursday is the print to watch, expected to come in at 4.0%, down from April’s 4.1%.
  
• NAB Business confidence (today) and CBA household spending (Thursday), both of which have indicated increasing pessimism among households and businesses in recent months, will provide further clarity on the state of the economy in conjunction with unemployment data.
  
• All eyes will be on the US tomorrow night with CPI data due in; analysts have headline increases of 0.1% MoM and 3.4% YoY, but upside surprises could add further strength to Friday’s sell-off in yields.