Daily Flows & Insights – Rates Higher for Longer

Daily Flows

  • A sell off at the longer end of the yield curve has seen 1 year reference rates climbing 10 basis points and 5 year, 25 basis points.
  • ADIs will have to reprice their product offerings accordingly, which presents an opportunity to pick up term deposits close to 6.00% today.
  • NCD margins continue to reflect a bid tone in the market, with 3 month NCDs hovering at +50 with a few names showing +55.

Rates Higher for Longer

  • That was the message from global bond markets over the past 24 hours.
  • As the market continued to digest the minutes from the Fed’s recent meeting buyers appears to take a hiatus leaving yields to drift high.
  • The move that started during the US session the previous session gather pace throughout yesterday’s Asian session before kicking again overnight.
  • Data in the US did little to stop the momentum with a solid private employment report ahead of tonight’s non-farm payrolls and upside surprise from the US PMI both fuelling the move.
  • While the short end was largely unaffected, rates from 1 year and out climbed high with the 1 year up 10bp while the 5 year jumped close to 25bp.
  • The move leaves the curve much flatter and bring value back in to the long end of the curve with move reward for locking in longer dated maturities.
  • This value could stick around until we see a shift in narrative from central banks.


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Curve Team
Jack Pedersen