Daily Flows

• With most economists predicting the cash rate to reach 4.60% by Q3 2023, credit spreads for short term deposits continue to rise to price in future expectations.
• 3 month term deposits are being offered at a range of 4.95%-5.35% to middle market investors.
• At the longer end significant flow continues to be directed to the longer year as market participants are eager to lock away funds for 1 year at 5.70%.
• NCD 3 month margins are elevated coming into EOFY with +50 being offered domestically and +60 by foreign branch banks.

U.S. Consumer Confidence Rises

• There was strong data coming out of the U.S. overnight with a rise in consumer confidence and new home sales jumping.
• The Conference Board Consumer Confidence increased to 109.7 from 102.5 for May.
• This is the highest level since early 2022, with current conditions and expectations rising.
• Up to 30% of families expect their financial situation to improve in the next six months.
• The 1-year inflation expectations dropped to 6.0% which is the lowest since December 2020, however it is still higher than FOMC’s inflation forecasts.

Investment Demand Remains Strong in the U.S.

• Durable goods came in at 1.7% MoM with the market forecasting a print of -0.9% and following on from an upwardly revised 1.2% in April.
• This rise in durable goods orders was driven transportation equipment, capital goods & machinery.
• U.S. new home sales also jumped to 12.2% for the month of May.
• This print indicates strong investment demand and will cause headaches for the Federal Reserve as they look to tame inflation.