Daily Flows

• NCD levels have leapt on higher BBSW rates this morning, with 6 months at 5.32% outright.
  
• Term deposit levels will remain elevated to finish the week with rates higher across the curve, representing a strong opportunity for investors looking to place funds out before EOFY.
• An A1/A bank leads the charge this morning at 5.45% for 12 month deposits with the same rate available for those looking to lock in duration for 5 years.

Upside Inflation Surprise Delivers RBA a Mid-Year Headache

• Australian inflation delivered a significant upside surprise yesterday, printing at 4.0% YoY for May on expectations of 3.8%. The trimmed mean level rose 0.3% on April figures, lifting to 4.4%.
  
• Swaps rates skyrocketed on the news, with 1 year up 14 basis points and 3 year up 22bps. At the shorter end, 6 month BBSW printed at 4.77% – an increase of 10bps.
  
• The Aussie dollar rose by as much as 0.4% in the aftermath as market expectations, which have whipsawed on each new piece of data in recent months, developed a distinctly hawkish tone.
  
• Prior to May inflation data, markets had a first cut 70% priced in for February 2025. Following a hotter-than-expected print on Wednesday, markets priced in 50% of one hike in both September and November with a first cut priced out completely.