Daily Flows
- Due to the NSW banking holiday, there was minimal flow in term deposits and NCDs.
- Most investments were focused on the shorter end of the curve, with 5.00% being offered for 3-month term deposits and 4.81% for NCDs.
- Last week, we saw offerings for the semi government FRN stock, QTC 2028. Residual volume may be available today.
Positive ISM Service Result Helps Slow Market Tumble
- The beginning of the week has been marked by volatility, as markets panicked off the back of US recession fears.
- This sentiment drove the unwinding of Japanese carry trades, and we have seen contagion spread to broader markets, with equities selling off and safe haven Treasury bonds rallying.
- With approximately 30% of the S&P 500’s value deriving from the ‘Magnificent 7’, disappointing results in AI profits this reporting season have contributed to the index posting its worst day since 2022.
- While risk aversion remains in the market, US ISM services rose to 51.4 in July (up from 48.8), with increases in prices paid, new orders, and employment. Additionally, FOMC speaker Goolsbee sought to bring calm, pointing out that while job numbers were weaker, economic growth remains steady.
- This saw slight reversals in Treasury yields, with the US 2-year reaching a low of 3.65% and climbing back to 3.92%.
- Looking ahead, local markets await the RBA meeting, where it is largely expected that the RBA will hold the cash rate at 4.35%.