Daily Flows & Insights – Softer U.S. PPI Eases Market Concerns

Daily Flows

  • 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.
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Curve Team
Jack Pedersen