Daily Flows
- Yesterday, 5.30% for a 5 year term deposit stood out with significant flow directed here.
- With reference rates picking up slightly after the RBA, this will most likely be offered today as well.
- NCD margins were held at +60 yesterday but may trace back down to +55 as mid month in flows receive liquidity demand.
RBA Holds and U.S. Retail Sales Misses Expectations
- Yesterday, as expected the RBA held the cash rate at 4.35% and showed no plans to cut rates any time soon.
- The meeting did not have to many surprises, with Governor Bullock making it clear that the path ahead was a narrow one.
- Bullock was careful not to directly insinuate that government spending has contributed to inflation in the post meeting conference.
- The next CPI print will be crucial in determining the montetary policy outlook. The RBA has made it clear persistent inflation is the number 1 enemy and they will do anything to avoid that situation.
- In the U.S. retail sales grew by only 0.1% MoM, missing expectations (expected 3.0% MoM).
- Whilst some of the decline was driven by a fall in petrol prices, the weak result also indicates that monetary policy is certainly affecting consumer demand.
