Daily Flows & Insights – U.S. Labour Market Shows Mixed Signals

Daily Flows

  • With rising short term reference rates, flow in the NCD market has seen outright rates above 4.25% for 3 months.
  • To take advantage of the current yield curve, market participants seem to be targeting the 6 month range where term deposits reached the 4.90% mark.
  • NAB had a fixed and floating senior unsecured bond issuance across 3 year and 5 year terms.
  • The issuance attracted around $5 Billion in funds. Those who missed out have opportunity to pick it up in the secondary market.

U.S. Labour Market Shows Mixed Signals

  • The U.S. labour market continues to show mixed signals. Initial jobless claims remain at elevated level, coming in at 242K (slightly above census).
  • This print suggests claims may be slowing but there is still activity in the labour market with workers still finding new positions.
  • Wage costs continue to climb and Unit labour costs came in higher than previous quarter (3.3%) at 6.3%.
  • An unclear weakening in the labour market will frustrate the Federal Reserve as it tries to slow down economic growth to avoid sustained inflation.
  • Going forward, signs of a turn in the labour market will be critical to developments in future monetary policy.

ECB Slows Hikes by 25 Basis Points

  • Overnight the ECB raised its policy rate by 25 basis points to 3.75% and also announced that it would increase the activity of its run-down asset program to approximately EUR25Bill per month from July (current amount of EUR15Bill).
  • The rate hike was fairly priced into markets, with some participants expecting a larger hike as the EU is behind globally.
  • With a tightening in lending standards the ECB noted they will take a cautious approach.
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Curve Team
Jack Pedersen