Daily Flows

• Bendigo and BOQ fixed lines present a good opportunity to lock in a yield upwards of 4.85% for 2 years as we close in on the end of the rate hike cycle.
• Demand for funds has cooled as we reach the end of the month. That being said middle market participants are still able place TD funds for 1 year at 5.50%.
• Outright NCD 3 month market level is at 4.73% and 6 month NCDs at 5.20%.

US Economy Continues to Show Strength

• The US economy growth was faster than expected for Q2 with an advanced estimate of 2.4% QoQ, up from 2.0% in Q1.
• The print showed a slowing in personal consumption in real terms. This will be a good sign for the Fed, interest rate hikes are beginning to have their desired affect.
• Many economists are having to reshape their hard landing out look, policy has reached a restrictive point and the economy seems to be adjusting well.
• The desired soft landing central banks are looking to pull off may be feasible.

Central Banks Take A Responsive Rather Than Preemptive Approach

• Overnight, the ECB followed suit from the Fed and hiked 25 basis points.
• They noted that monetary policy is not on a predetermined basis and will now continue on data dependent reactive manner.
• A pause in September would not indicate an end of hikes but may be necessary to asses the lagging nature of monetary policy.
• Globally, central banks are nearing the end of the rate hike cycle, forward guidance is being dropped and its now goldilocks situation of too much or too little restrictiveness.