Daily Flows

• 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.