Daily Flows & Insights – Soft Employment Data in The U.S. Digested as Good News

Daily Flows

  • Seasonal inflows has seen liquidity demand met in the TD space, that being said, levels still remain elevated due reference rates remaining steady.
  • The 1 year term continues to attract flow with levels upwards of 5.40% compared to shorter terms at 5.15%.
  • 6-month NCDs are at an outright level of 5.35%, enough to entice usual short term placements to term out.

Soft Employment Data in The U.S. Digested as Good News

  • Overnight we had U.S ADP employment change by +150K, 15K less than expected. Paired with this initial Jobless Claims rose to a 10 month high and ISM fell below 50 to 48.8.
  • All three of these data points eluded to the narrative that the labour market is showing signs of easing and the economy is weakening, good news when you are trying to tackle inflation.
  • U.S. shares rose and bond yields fell as markets took into account the data.
  • The string of data will definitely serve as welcoming to the Fed who are continuing to anchor market expectations and make sure financial conditions don’t run away on good news.
  • Going forward, if disinflation trends and softening economic data continues we may find the Fed in a position to cut rates.
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Curve Team
Jack Pedersen