With minimal retracement from increases yesterday, banks have had to reprice upwards to attract funds.
A margin of 80 basis points in the 1 year term deposits means outright offerings of 5.20% around.
NCD Margins have stayed at +45 for 3 months, there is potential to earn +55 from foreign branch banks looking to attract funds.
Softer U.S. PPI Eases Market Concerns
Softer US PPI data provided relief to markets after concerns raised by the CPI report regarding Fed cuts’ timing and pace.
US producer prices rose by 0.2% month-over-month in March 2024, marking the smallest increase in three months, below the forecasted 0.3%.
Services prices increased by 0.3%, led by gains in securities brokerage, investment advice, and related services (3.1%), while goods costs declined by 0.1%, mainly due to a drop in gasoline prices (3.6%).
Year-on-year, the Producer Price Index (PPI) rose by 2.1%, the highest since April 2023, with the core index increasing by 0.1%, pushing the annual rate to 2.4%.
New York Fed President Williams sees no immediate need to adjust policy, believes inflation is gradually moving towards 2%, consistent with FOMC’s cautious stance.
The yield curve still remains elevated from movements earlier in the week. Opportunity lies in fixed longer term products with term deposits above 5.10% for 5 years.