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.