Daily Flows
- The EOFY saw plenty of activity in TD markets with an increased supply of funds being met gladly by ADIs looking to sure up positions.
- An ‘A’ rated ADI attracted market participants with an offering of 5.62% for 1 year term deposits.
- With the RBA decision looming there may be a downturn in short dated placements as investors wait on the sidelines.
- NCD margins for 3 months were offered at +50 domestically and +60 by foreign banks to win new funds on Friday.
The Feds Preferred Inflation Measure Eases
- On Friday, U.S. PCE price index rose by 0.1% in May, to an annualised level of 3.8% YoY down from 4.3% YoY in April.
- The Core PCE data is the Feds preferred measurement of inflation. It lifted by 0.3% MoM, coming in slightly weaker than expected (4.6% vs 4.7%).
- This is the lowest YoY print since April 2021. With the print not showing anything extra ordinary, markets expectations on future monetary policy were little changed.
The Week Ahead
- Tomorrow, the U.S. markets are off with Independence Day and the RBA is meeting to make a decision on monetary policy.
- Although the monthly CPI inflation print showed signs of slowing, most market commentators are not convinced it is significant enough to increase the likelihood of a pause.
- Strength in the labour market continues to be a prominent factor in economists calling for another hike and the boards comments of “finely balanced” on previous decisions are a key point for a potential pause tomorrow.
- On Thursday, FOMC minutes is released, giving insight unto how the Fed is approaching their policy decision making and may give insight into future interest rate decisions.
- To finish off the week JOLTs Job Openings for May is released. There was an unexpected increase in job vacancies for April. Markets will watch this print closely to see if this trend continues.