Daily Flows
- Yesterday, The term deposit yield curve priced down around 5 basis points from 6 months onwards.
- That being said, market participants were still able to pick up discretionary offerings of 5.75% for 1 year from BBB+ rated names.
- NCD margins are being offered at +55 for 3 months today.
US Fed Not Done Taming Inflation
- Last night the minutes from the Fed’s recent meeting showed that most Fed members agree that their job taming inflation is not yet done.
- Despite the unanimous decision in the end to leave rates on hold, some members had considered a 25bp hike at the meeting.
- With almost all members expecting further tightening to come at some point, the market is now nearly fully priced for a hike later this month.
- Members expectations for further tightening seem at odds with the Fed staff’s economic forecasts.
- Current Fed forecasts point to the US economy entering a mild recession later this year.
- Before we get to the next Fed meeting, CPI will be out next week with another sharp fall in the headline rate of inflation expected.
- However core inflation is expected to remain sticky, keeping pressure on the Fed.