Daily Flows
- Market participants yesterday took advantage of attractive rates from an A2/BBB name showing 5.40% for 9 months and 5.45% for 12 months, which were rapidly taken up by investors.
- BBSW & swap rates were down overnight, with ADIs responding accordingly this morning. The best A2/BBB rates are at 5.35% for 12 months, with some unrated names still showing 5.25% for 3 months for those who can allocate funds to this space.
- The fortnight leading into Christmas can occasionally present great opportunities as ADIs plug last-minute funding gaps, so it is worth keeping an eye on the market as these gaps present themselves in the form of strong special rates.
The Next Move is Down? US Hits Pause for Third Straight Month
- The Fed held interest rates in the 5.25-5.50% band for the third consecutive meeting, sending a clear signal to markets that its hiking cycle is finished. Markets are now pricing in almost 7 full rate cuts by January 2025, with the first projected for March 2024.
- Despite Jerome Powell’s reminder that officials still have the door open to a future hike, market optimism was matched by a Fed Dot Plot which had no policymakers projecting further interest rate hikes for the first time since early 2021.
- Australian employment numbers are released at 11:30 this morning, with projections for a slight uptick in unemployment from 3.7% in October to 3.8% in November and a fall by the same margin in the participation rate. Both data points, if they come in where projected, would add further fuel to the narrative that the RBA’s hiking cycle is working as intended to curb inflation.