Daily Flows & Insights – U.S. PCE Not Enough to Rock the Boat and Shift Monetary Outlook

Daily Flows

  • There was plenty of flow to mark out the EOFY with levels above 5.40% being offered by Rabobank (A-1/A).
  • In the NCD space, one domestic ADI was able to hoover up funds offering +60 for 3 – 6 months.
  • Looking ahead there is plenty of opportunity to pick up bespoke levels as banks look to chase down new financial year funding targets.

U.S. PCE Not Enough to Rock the Boat and Shift Monetary Outlook

  • Last week, the release of the U.S. core PCE price index rose by only 0.1% MoM, the softest increase since November 2023 and slowed on an annual basis to 2.6% YoY.
  • The data revealed that there was an increase in disposable personal income by 0.5% and only a 0.2% rise in personal consumption expenditures, indicating more spending power and less urgency for the Fed to lower rates.
  • The print is good news for the Fed but they will still have to exercise caution going forward.
  • Federal Reserve Governor Michelle Bowman expressed was kept a hawkish tone, citing persistent inflation risks and strong demand in a tight labour market as a worrying back drop.
  • Fed Fund futures pricing reflected the cautious sentiment well, with pricing of a 25bp rate cut in September edging out to 75% from 70%.
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Curve Team
Jack Pedersen