Daily Flows

• On Friday, we saw a shift towards longer-dated Semi-Government Floaters, where the pickup in yield was favoured by investors.
• Foreign branch bank ADIs attracted a lot of NCD flow, with outright NCD levels above 5.10% for 6 months.
• An ‘A’ rated ADI is offering 5.03% for 12 months and has gained significant traction at this level.

PPI Cools Market Nerves After Stronger Than Expected CPI Data

• The U.S. Monthly PPI came in weaker than expected at 0.0% month-on-month (forecasted 0.2% increase), with core PPI rising 0.2% (0.3% expected).
  • Service prices rose 0.2%, driven by a 3% increase in deposit service costs, with notable price hikes in machinery, furniture, and airline services.
  • Producer price inflation eased to 1.8% annually, a seven-month low, but still above expectations of 1.6%.
  • Some of the market’s concern around monetary policy post-CPI data eased, with bond yields slightly lower.
  • In the week ahead, the figure to watch will be Australian Employment data.