Daily Flows

• 5.35% remained the top of market level yesterday from A1 and A2 banks for 12 months, attracting significant inflows from market participants with surplus cash.
• +50 is the market rate for NCDs this week with outright levels north of the 5.15% mark available for 6 month NCDs.
• Higher unemployment in today’s data may send swaps lower, with the 5 year rate of 5.35% available from an A1 issuer representing good value while it is available.

US Inflation Prints as Expected, Sparking Initial Relief Rally

• US inflation printed as expected overnight with growth of 0.3% MoM and 3.6% YoY in core inflation. Headline inflation was slightly lower than expected at 0.3% on projections of 0.4%.
• Bond markets broadly rose as they pared back losses this year, with 5 and 10 year US treasuries rallying 11 bps on the day.
• US stocks, meanwhile, hit record highs on the back of the positive inflation data as the S&P 500 finished up 1.17%.
• Australian wages came in slightly cooler than expected with quarterly growth of 0.8% (3.2% annualised) and YoY growth of 4.1%. Employment data out at 11:30am will be interesting to watch to see if the underlying trends dampening wages growth play out in the jobs print.