Daily Flows

• ADI’s are still sitting tight to round out the first week of the year, with an expectation of more activity next week.
• There are still some pretty attractive long term levels floating about, with investors taking advantage before these evaporate.
• Next week should see some above-market levels revert back to more typical market rates.

US Data

• Stronger than expected jobs data in the US saw a further unwinding of rate cut expectations overnight.
• The privately produced ADP employment report saw more jobs created than was forecast, while initial jobless claims came in lower than expected.
• On the back of the releases, expectations for rate cuts by the Fed were pared back a little further with almost a full cut wiped out this week, with only 6 expected by next January.
• This has seen expectations for RBA action this year also tamed with only 2 cuts now only just priced in by December, down from almost 3 earlier in the week.
• The real litmus test for the US outlook will come tonight in the form of the US non-farm payrolls number. While the ADP report is usually a good guide, the non-farm payrolls data can sometimes throw up a surprise.