Daily Flows & Insights – Slowing Home Sales and Weaker Activity in the U.S.

Daily Flows

  • Longer tenor rates from an ‘A’ rated bank have been standout this week: 1-2 year 5.37%, 3 year 5.20%, 4 year 5.22%, 5 year 5.25%.
  • Market participants looking for Green-Friendly counterparties have directed flow to Bendigo Bank, showing 5.15% for 6 months.
  • The recent 5 year fixed CBA issuance is trading in the secondary market with a YTM upwards of 5.00%.

Slowing Home Sales and Weaker Activity in the U.S.

  • Existing-home sales in the US dropped 2.2% in July 2023 to 4.07 million units, significantly more than expected (-0.5% forecasted).
  • The primary drivers behind this decrease were identified as elevated mortgage rates and the persistent issue of limited housing inventory. The impact of these factors was felt across different segments of the market, contributing to the overall downturn in sales.
  • The Philadelphia Fed Non-Manufacturing Activity index dropped by 14.5 to -13.1 in August.
  • New orders, a forward looking economic indicator was down for the third consecutive month.
  • Inflationary pressures remain with prices rising, however it seems firms are expecting their price increases to be lower than the rate of inflation.
  • Both these softer prints do not seem to have influenced markets greatly but are watched carefully in the lead up to Jackson Hole.
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Curve Team
Jack Pedersen