Daily Flows
- 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.