Daily Flows

• Foreign branches continue to represent the best relative value in the NCD market with multiple A2 issuers at +55 for 3 months yesterday.
  
• Investors have adopted longer duration in deposits this week with 5 year levels at 5.25% from a single ADI this week, significantly higher than other offerings in the market.
• Next week’s quarterly CPI print will be closely watched with a softer result likely to send longer rates lower than current levels. Today is a good time to lock in duration at attractive yields prior to the inflation result.

Not Too Hot, Not Too Cold as Resilient US Economy Inches Closer to Goldilocks Scenario

• The US economy produced surprisingly strong GDP growth in the second quarter, printing a gain of 2.8%.
  
• Consumer, government and business spending all drove gains, supported by growth in inventories, while on the downside there were regressions in the housing market and a wider trade deficit.
  
• This data eased concerns of a slowing economy and represents a “Goldilocks” result for a central bank anxious to ease inflation while encouraging growth.
  
• Tonight, we see a couple of key indices in the Core PCE Price index and personal income & spending levels, which will provide a clearer picture of the state of the US economy heading into the weekend with most pundits expecting a first cut in September.