In the term deposit space, investors are finding value in an offering of 5.20% for 10 months from a BBB+ ADI.
Two-way flows are returning to the NCD market with banks keen to take funds.
We continue to see flow directed to longer dated semi-government FRNs where market participants receive a greater term premium for maturities 5 year onwards.
RBA Stand Firm in The Face of Market Volatility and U.S. Recession Concern
The RBA decided to maintain interest rates at their current level, as anticipated, while remaining alert to potential inflation risks.
The RBA highlighted the necessity for monetary policy to stay sufficiently restrictive until there is confidence that inflation is moving towards the target range, with a particular focus on trimmed mean inflation as a key indicator.
During the post-meeting press conference, Governor Bullock dismissed market expectations for imminent rate cuts, stating that such cuts do not reflect the Board’s current perspective.
The RBA anticipates inflation will return to the midpoint of the target range by the end of 2026, with slightly revised GDP growth forecasts and a modest rise in the unemployment rate, considering domestic outlook risks to be broadly balanced.
With the more hawkish than expected rhetoric and rebound in trading movements from the beginning of the week, we have seen the swap curve blow out by approx 5-10 basis points from 1-5 years.