Daily Flows
- Demand for 2-year funds saw reactive market participants secure 4.70% for a BBB-rated term deposit.
- A bid tone is returning, with a few ADIs actively taking on new NCD funds.
- The highest term deposit rate locked in yesterday was 4.85% for 6 months, a notable shift from two weeks ago when 5.15% for 6 months was available.
Trade Flows Reflect Consideration of Potential Tariff Policies
- Australia’s balance of trade recorded a $5.1bn surplus in December, $1.4bn below market expectations and down from November.
- Imports surged 5.9% m/m, outpacing export growth, largely driven by a sharp rise in capital goods imports, likely linked to aircraft deliveries.
- Exports rose 1.1% m/m, but gold exports declined by 22.4%, weighing on the overall trade balance.
- Exports to the US jumped 60% m/m, potentially reflecting front-loading ahead of anticipated tariff hikes under the new administration.
- Global trade risks remain elevated, with uncertainty surrounding US tariff policies and potential implications for Australia’s trade flows in the coming months.
- Markets will closely monitor import growth and external demand trends, as shifts in global trade flows could influence future monetary policy decisions and yield curve positioning.