Daily Flows
- Yesterday, we saw a lot of term deposit activity from 6-9 months with rates ranging from 4.68-4.76%.
- For 1 year, middle market clients are able to pick up 4.68% from an ‘A’ rated foreign subsidiary bank.
- We have seen active trading in mutual bank paper, including Peoples First Bank Feb 2027 Bond and Newcastle Perm Jan 2030.
U.S. Disinflation Progress Continues
- Headline and core CPI inflation increased by 0.2% m/m in February, easing from 0.5% and 0.4% in January, coming in below market expectations of 0.3%. On an annual basis, headline CPI reached 2.8% y/y, while core inflation stood at 3.1% y/y.
- The data supports the FOMC’s view that disinflation remains on track, but does not provide justification for immediate rate cuts, given persistent economic uncertainty. The federal funds rate is expected to remain unchanged at next week’s meeting.
- Uncertainty around US trade policy persists, with tariffs continuing to evolve. While the direct impact on Australia remains limited, the indirect effects require close monitoring.
- Australia’s large goods trade deficit with the US suggests that tariffs on direct trade flows are unlikely to have a significant impact on the domestic economy.
- Australia’s greater exposure lies in indirect risks, particularly if slower growth in key trading partners such as China weighs on exports and business sentiment.
