Daily Flows

• Since the most recent RBA pause, NCD flow has favoured the 6 month tenor, as market participants look take advantage of the 30 basis point gap between 3 month and 6 month reference rates.
• With the major banks end of financial year approaching and loan growth slowing, this gap could minimise as activity slows down.
• TD activity was spread across the curve. An ‘A’ rated bank continues to offer stand out rates with 5.25% for 5 years.

Seasonality Plays Into Weak Employment Figures

• Employment data came in weaker than expected yesterday. Unemployment rose to 3.7% and was driven by decreases in full time employment change.
• The labour market is a key point of concern for the RBA in their fight against inflation.
• Whilst on the surface, this may signal a turning point, volatility of this print needs to be taken into consideration.
• Survey’s taken during school holiday periods often see rises in unemployment as people may be between jobs or have quit.
• “July includes the school holidays, and we continue to see some changes around when people take their leave and start or leave a job. It’s important to consider this when looking at month-to-month changes, compared with the usual seasonal pattern. The only other fall in employment in 2023 was in April, which also included school holidays.”
• The RBA may not take this as the ‘turning point’ but they will consider it a step in the right direction.