Daily Flows & Insights – U.S. CPI Continues to Drive Deceleration Narrative & Michelle Bullock to Lead RBA

Daily Flows

  • Although reference rates dipped off the back of softer than expected U.S. CPI, Market Participants were still able to pick up 5.75% for 1 year TDs through bespoke limited opportunities.
  • With the peak of the rate hike cycle culminating, Fixed bond activity has picked up as market participants are looking to lock in high yields for longer, betting on the fact that they will out perform floating securities in the years ahead.
  • NCD margins are being picked up domestically at +50 for 3 months and +55 from Foreign branch banks.

U.S. CPI Continues to Drive Deceleration Narrative

  • Last night, U.S. producer prices rose by 0.1% MoM in June. This is off the back of a 0.4% fall in May and below market forecasts of 0.2% rise.
  • This print was driven by service based factors.
  • Viewed in conjunction with yesterday’s CPI release, the disinflation narrative is well and truly gathering traction in the markets.
  • It has put into questions future rate hikes and the amount at which the Fed will go for.
  • The Fed will be wary to get too excited. In the past the Fed was head faked by initial inflation data and marking the concerns marking as ‘transitory’.

Michelle Bullock to Lead RBA

  • Former Deputy Governor of the RBA, Michelle Bullock, has been appointed RBA Governor.
  • Michelle Bullock is the first Woman to lead the RBA.
  • Having held a key leadership position throughout the last year, she will be well equipped to finish off the job at hand of taming inflation.
  • An in-house appointment is also made sense as the RBA is set to undergo significant reforms.
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Curve Team
Jack Pedersen