Today, Westpac has launched a 5-year FXD/FRN Bond with an initial price guidance of 3mBBSW +93. This launch is +42 basis points tighter than BOQ’s launch last fortnight.
There is a bid tone returning to the NCD market, with banks keen to take on funds currently.
TD levels remain elevated as reference rates have not retraced since last week.
U.S. Labour Market Growth Slows Down
April non-farm payrolls (NFP) increased by 175k, below the expected 240k gain.
The unemployment rate rose by 0.1% to 3.9%, while average hourly earnings growth slowed to 0.2% m/m, reaching 3.9% y/y.
While this soft data is good news to the FOMC as they battle inflation, as a standalone figure, it is not enough to put the FOMC’s concerns to bed.
The report saw financial markets increase the likelihood of cuts this year, with markets expecting the central bank to ease monetary policy this September.
RBA Tomorrow
It is expected that the RBA will leave the cash rate unchanged at 4.35% tomorrow.
Expectations for revised higher near-term inflation forecasts following Q1 CPI data, particularly focusing on sticky services inflation risks.
As it seems we are approaching a turning point, there is more volatility in opinion surrounding the monetary policy outlook.
Currently, some economists are calling for 2 hikes this year while financial markets and most economists are calling for a cut late this year.