Daily Flows

• We are seeing steady demand for funding across the banking sector in the wake of Black Friday sales as we head into the holiday break.
• NCD margins have drifted wider but appear contained for the minute, whilst there is plenty of negotiating going on to attract Term Deposit funding with various banks looking for funding across the curve
• With the holiday period looming, demand for funds will remain strong until ADI’s get set, once their desired position is established rates are likely to drop.

Slow Growth with GDP Undershooting Expectations

• The final print of GDP for the third quarter disappointed with the economy only growing 0.3%, short of the 0.5% that was expected. As a result the annual pace of growth slowed to 0.8% from 1%
• Growth on a per capita basis remained negative, falling a further 0.2% to be down 1.5% over the year
• Beyond the headline number it made for sobering reading with the public sector adding 0.6% to the outcome meaning on balance, everything outside of government spending went backwards.
• Importantly household consumption was flat for the quarter despite the large tax cuts that came into effect.
• As a result, expectations for the cash rate cuts have ramped up again, putting them at odds with recent RBA rhetoric