![Daily Flows & Insights – U.S. CPI Running Hot Pushes Out Cut Expectations](/_next/image?url=https%3A%2F%2Fdata.curve.com.au%2Fwp-content%2Fuploads%2F2024%2F04%2FScreenshot-2024-04-11-at-11.52.06-am-1024x406.png&w=3840&q=75)
Daily Flows
- Yesterday, there was a flow directed towards the Suncorp 3mBBSW +125 12/2027 bond, a stock that bears significant liquidity in the market.
- Term deposit margins for 1 year have narrowed to 80-85 bps from last year’s highs of 100-110. This tightening may reflect less strained liquidity conditions.
- As we approach the TFF repayment window, the departure of cheap funds from the system may lead to widening margins, benefiting investors.
U.S. CPI Running Hot Pushes Out Cut Expectations
- Headline CPI rose by 0.38% in March, leading to a 12-month inflation increase to 3.5%, surpassing expectations and pre-pandemic norms.
- Energy prices, which were previously dragging down CPI inflation, swung positively contributing to the increase, while inflation outside of energy and food has gradually slowed.
- Prices for food away from home, a focal point, increased by 26bp in March, showing moderate growth compared to the significant slowing observed in February.
- This data combined with the Fed minutes led to declines in investor confidence, pushing out the expectation for the first rate cut to November and prompting a sell-off in equities.
- Bond yields surged after the data release, with the U.S. 10-year rising by 19 basis points to 4.55 and the 2-year climbing to 4.97.
- Domestic market participants should anticipate the Aussie yield curve to follow suit.