Daily Flows
- 5.11% has been the level required to attract funds for 1-year term deposits. In the TD space, market participants have been favouring green-friendly counterparties when faced with the same credit rating.
- NCD margins have recently settled. That being said, lots of banks seem to have micro dynamics driving specific funding requirements.
- In the fixed income space, market participants have been quick to take advantage of bespoke opportunities on Senior Unsecured offerings in thinly traded lines.
U.S. & Australian Interest Rate Outlook
- With the FOMC keen to keep pricing-setting behaviour at bay, their recent hawkish tone saw parts of the curve elevated with the 10-year Treasury rate at 4.35%.
- Uncertainty loomed over whether this would further blow out, but it appears money managers have piled funds in at this level, resulting in a retracement of 15 basis points so far this week.
- This rally may have been fuelled by the Fed’s dot plot, which signaled 0.75% worth of cuts in 2024.
- Currently, markets have priced in over an 80% chance of rate cuts starting in June.
- The RBA is maintaining a fairly neutral stance despite a stronger-than-expected labour market.
- Compared to the U.S., markets are expecting a more gradual change, with an 80% chance of a cut by September.
- Markets will look ahead to monthly CPI for further clarity; however, this print should always be considered as an indicator compared to quarterly data.