Daily Flows

• Yesterday saw a surge in council flows across all terms, with many taking advantage of competitive BBB-rated names like Judo and Heartland.
• For 2-year deposits, 4.10% was the going rate, a level we haven’t seen in recent weeks. With just two days until EOFY, we expect this pricing to hold today.
• NCD demand remains strong, particularly for new money, with +45 over 3m BBSW continuing to price as the benchmark into month-end.

US Data Shifts Fed Outlook

• US government bond yields fell on Thursday after a run of US data boosted expectations for three Fed rate cuts this year. 66bps of cuts are now priced in for 2025, lifting the chance of three 25bp moves. The 10-year Treasury yield dropped 5bps to 4.25%, and the 2-year fell 6bps to 3.72%.
• Economic data was mixed: Q1 GDP was revised down to -0.5% annualised, with consumer spending rising just 0.5%, the weakest since the pandemic. But durable goods orders jumped 16.4% m/m in May.
• The Wall Street Journal reported Trump may announce his pick to succeed Fed Chair Powell early, adding focus to Fed leadership.
• Locally, ABS job vacancies rose 2.9% in the three months to May, totalling 339.4k. That’s just 2.8% lower y/y, and still well above pre-COVID levels, suggesting labour market tightness.