Daily Flows

• NCD margins have been moving back up over the last week with domestic A2/BBB names at +45 to start the week, with +50 available from foreign branch banks.
• TD levels have come down across the board following last week’s inflation data, but opportunities are still available for investors with surplus cash as several ADIs look to plug funding gaps this week.
• With longer-term TD rates lower across the board – in one case, down 30bps day-on-day for 5 year deposits – fixed rate bonds have been attracting interest from our client base as yields are increasingly provide strong relative value in comparison with term deposits.

The Week Ahead

• The RBA’s first meeting of 2024 takes place this week, with economists universally expecting the central bank to hold the cash rate at 4.35%.
• Tomorrow marks the start of the RBA’s new approach to their meetings, now held every six weeks and featuring a press conference at 3:30pm after the decision at 2:30pm.
• Money markets have a first cut priced in August with just over two expected by the end of the year. These expectations will be one to keep an eye on after tomorrow’ press conference and the release of the RBA’s Statement of Monetary Policy.
• US non-farm payroll numbers on Friday night almost doubled expectations and, while factoring in start-of-year changes and other variables, points to the continued resilience of the US economy.
• This was on the back of the Fed’s decision to pause interest rates once more in the 5.25-5.50% target range and it will be interesting to watch how markets digest the news over the course of this week.