Daily Flows

• Overnight, the U.S. 10-year Treasury hit a 16-year high of 4.91%, and the Aussie 10-year yield has climbed to 4.74%.
• This movement in the U.S. 10-year yield is astounding, considering it was at a level of 4.10% in late August.
• Today, market participants should expect term deposit offerings close to 5.40% for 3-5 year placements.
• Domestic NCD margins remain around +40 for 3 months with a consistent balance between supply and demand.

Resilient U.S. Economy

• U.S. government bond yields continued to increase, partly driven by strong economic data, raising concerns about a potential Fed interest rate cut.
• U.S. homebuilding showed a significant rebound, indicating economic resilience.
• The FOMC’s current stance is one of ‘patience.’ The print may not be enough to warrant a change to this, considering that higher yields are currently contributing to higher financial conditions.
• The Fed’s Beige Book described U.S. growth as “stable” or “slightly weaker.”
• The U.S. Treasury successfully auctioned $13 billion of 20-year bonds at a 5.245% yield due to robust demand.

China GDP

• China’s Q3 economic growth slowed to 4.9% year-on-year from 6.3% in Q2, beating forecasts of 4.6%.
• The main driver of this was Q2’s inflated growth caused by COVID-19 lockdowns in 2022.
• Quarterly growth suggests an acceleration in activity, primarily in the services sector.
• Exports to primary trading partners dropped more rapidly than the overall decline, down by 9.9% year-on-year, as China expanded exports to destinations like Russia.
• The headwinds will continue to be in the property sector and weak external demand.