Daily Flows & Insights – Strong Retail Sales Sends Yields Soaring

Daily Flows

  • We saw strong NCD flows yesterday as rates of +55 over 6 month BBSW saw outright yields of 5.11% as they approached term deposit levels.
  • Value remains for TD investors in the A1/A foreign branches, with 5.22% for 6 months and 5.19% for 1 year deposits on offer yesterday.
  • Semi-FRNs remain hot property today with plenty of stock available from most issuers out to 2031.

Strong Retail Sales Sends Yields Soaring

  • US retail sales for April came in with a bang last night, with a headline print of 0.7% on expectations of 0.4%.
  • Food and retail stores (ex automobiles) saw a 1.1% MoM rise on February’s numbers, which were themselves revised upwards from 0.3% to 0.6%.
  • On the back of this data print most US Treasury yields climbed to their highest level year-to-date with 10 year Treasury notes up 14 basis points to 4.66%
  • NY Fed President John Williams considers it still “likely” the central bank will begin cutting interest rates this year, as long as inflation continues to come down, but pointed to the ongoing strength of consumers as a reason this won’t be immediate.
  • Interest rate markets are pricing in a first US cut in September, with a second now not priced in until January 2025. Australia’s first cut is projected for December.
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Curve Team
Josiah Binet