Daily Flows & Insights – U.S. PPI & The Week Ahead

Daily Flows

  • Last Friday, there was significant NCD flow with a BBB ADI offering +50 for 3-12 months.
  • With the term deposit yield curve flattening and outright levels reducing, many are reshaping their investment strategy.
  • Market participants are considering new counter parties and reviewing investment policies in order to maximise returns.

U.S. PPI Hotter Than Expected

  • On Friday night, U.S. Producer Price Inflation printed at 0.3% MoM above market forecasts of 0.2%.
  • Services prices rose by 0.5%, jumping up from a 0.1% fall in June.
  • Portfolio management was the key driver here (7.6%).
  • Overall the print was not too jarring a result, the Fed will still be satisfied with the progress made and the overall downward trend.
  • U.S. 10-year Treasury yields reached 4.15% even with the University of Michigan survey releasing inflation expectations slightly lower than forecasted.
  • The yield movement may be driven more by supply in the treasury market rather than data dependent.

The Week Ahead

  • The beginning of the week is quiet, RBA minutes is released tomorrow along with U.S. Retail Sales.
  • Retail sales was below market forecasts last month but still keeps reflecting resilient consumers in the face of cost of living pressures.
  • On Wednesday, the FOMC minutes will be scanned closely by markets as it seems the Fed are nearing the end of their rate hike cycle.
  • Domestically, employment data for July is released on Thursday. The RBA will be looking for a loosening in the labour market, inline with their forecast of unemployment reaching 4.5% by the end of the year.
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Curve Team
Jack Pedersen