Daily Flows & Insights – U.S. Downgrade & ADP Employment

Daily Flows

  • Westpac has lunched a 3YR Senior Unsecured MTN with a Fixed and Floating tranche.
  • The initial price guidance is 3mBBSW + 82 and SQ ASQ + 82 (indicative yield of 4.88%).
  • The TD curve has peak outright offerings from 9-12 months.
  • Although 2 – 5 year offerings are lower, they have attracted flow as market participants consider future interest rate expectations.
  • A standout NCD margin of +65 for 3 months from a foreign branch ADI continues to attract flow.

U.S. Downgrade & ADP Employment

  • Two data points come out of the U.S. which may have influenced market movement: Fitch downgrading of the U.S government & ADP Jobs data.
  • Fitch downgraded U.S. credit rating from AAA to AA+.
  • Fitch agency citied governance and fiscal challenges as the points of concern.
  • ADP Employment change came in well above forecast at 324K (markets forecasted 210K).
  • Markets usually do not trade heavily of this print however it may have given a chance for equities to retrace the current run.
  • The non-farm payrolls released later in the week should provide more clarity on the state of the U.S. labour market.
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Curve Team
Jack Pedersen