Daily Flows

• On Friday, A BBB bank was looking for funds in the market and offered 5.25% for 18 months to attract.
• NCD margins continue to be offered at +45 with +50 being offered occasionally to win funds.
• The ANZ 5 Yr Fixed bond that priced on Thursday has been trading in the secondary market slightly skinner, with a YTM of 4.92-4.98%.

U.S. Non-Farm Payrolls

• 187K jobs were added to the U.S. economy in August 2023, beating market expectations of 170K.
• This print marks the 3rd consecutive month of below 200K, indicating a gradual easing in labour conditions.
• The unemployment rose to 3.8% above market exceptions of 3.5% as there was a sharp rise in those entering the labour force.
• Wages has slowed slightly, with average hourly earnings increased by 0.2% MoM coming down from 0.4% in July.
• This print will be good news for the Fed in their challenge of  pulling off a soft landing, reducing the chance of a Fed hike later this month.

The Week Ahead

• Tomorrow is Governor Lowe’s last RBA meeting before Michelle Bullock takes the reins.
• Markets are expecting a continued pause, with no stand out data to warrant a hike.
• With the cash rate being held at 4.10%, the notion that rates will stay elevated for longer and the cutting cycle starting later is gaining momentum.
• Domestic Q2 GDP is released on Wednesday. Economists are forecasting a print of 0.3%.
• This will give a clearer picture on how higher interest rates and inflation has been placing pressure on the economy.
• Consumer spending, Housing investment and business growth may be key data points for this print.
• In the U.S. ISM Services index comes out on Thursday night. The manufacturing index rose last week, it will be interesting to see if services follows suits.
• Finishing off the week there is China’s balance of trade & inflation data.
• Markets are forecasting inflation to continue to decelerate at a rate of 0.4%.