Daily Flows

• We saw interest in attractive credit margins in the 5 year space for Major Bank FRNs yesterday as investors swapped out of BBB paper, picking up longer duration without sacrificing yield.
• An A2/BBB name was paying margins of +60 over swap for 6 month NCD yesterdays as they saw strong flows to set themselves for Christmas.
• NCD issuers are still paying +55 over swap for 3 months, with one A2/BBB+ name showing 5.05% outright for 12 months.

Strong Employment Data – But for How Long?

• Australia’s employment numbers came in a lot stronger than projected yesterday, driven by surging migration boosting labor supply to match rapid job growth. The 61,500 new positions created in November was five times larger than the 11,500 projected by surveyed economists.
• The unemployment rate ticked up by 0.2% to 3.9%, marking a 50bp increase in the last year, as the participation rate increased from 66.9% to 67.2%.
• Migration is slowing into 2024, driving falling labor demand in a softer economy. The rising unemployment expected in future releases plays into market expectations of monetary policy easing towards the back end of next year.