Daily Flows

• Banks looking for funds in the Unrated space represent an opportunity to pick up a 3 month term deposit above 5.10%.
• A BBB foreign branch bank is offering +65 for 6 month NCDs which is an outright level of 5.27%.
• Yesterday, CBA launched a 1 year MTN which set at +47 and UBS launched a 3 and 5 year, pricing at +125 & +145 respectively.

RBA Minutes

• RBA’s November meeting resulted in a 25 basis points cash rate hike to 4.35%, in line with expectations.
• The following points were considered in the decision to hike:
  • Subdued growth in consumption persists, but recent retail sales data suggests better-than-expected spending.
  • Resilient labor market conditions with slow employment growth and a gradual rise in the unemployment rate.
  • Wages growth outlook revised lower, but unit labor costs remain high.
• The Meeting minutes were surprisingly hawkish. As always the RBA kept their options open, citing their approach as data dependent over the coming meetings.

FOMC Minutes

• The FOMC was keen to confirm their cautious approach to monetary policy, making it clear the future rate hikes are not ruled out yet.
• The FOMC made a note that tighter financial conditions were adding to restricting conditions, however bond yields have dropped 50 basis points since the meeting.
• It seems the Fed is more aware of the risks of overdoing inflation than previous meetings and are keen to find the appropriate balance.