Daily Flows & Insights – Volatile End to The Week & The Week Ahead

Daily Flows

  • Uncertainty over the Israel/Iran tension made for volatile markets on Friday.
  • That being said, markets seemed to have settled today, with most risk-off trading finished.
  • TD levels remain unchanged today, with 5.16% for 5 years still achievable.

Volatile End to The Week

  • Escalations of tension in the Middle East led to risk-off actions in markets, which were unwound by the end of the day.
  • Looking back over the week, the sell-off in yields kept the curve historically elevated as the “higher for longer” sentiment was digested.
  • US Treasury 2-year yields rose to 5.00%, and the 10-year reached 4.62%. Australia followed suit, with our 10-year finishing the week at 4.32%.

The Week Ahead

  • The main event for this week will be Q1 Australian Inflation, with CPI expected to rise to 0.8% QoQ in Q1 2024, and annual inflation projected to drop to 3.5% y/y.
  • Despite slightly higher inflation expectations compared to the Reserve Bank of Australia’s forecasts, the notion that monetary policy may need to tighten has not been entertained in the slightest.
  • In the U.S., Q1 GDP and the PCE deflator data for the month of March are released. This is expected to influence the markets considerably, determining whether alarm bells should be ringing due to the recent spells of elevated inflation.
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Curve Team
Jack Pedersen