Daily Flows
- Major bank FRNs proved popular yesterday at the 4 and 5 year tenors, with flows into NAB and ANZ paper as clients balanced portfolio weights.
- The A1/A name chasing funds this week has retained their 12 month level today at 5.18%, which we expect to attract flows again today before their rates drop.
- NCD margins remain around the +50 mark for foreign branch banks, representing attractive relative value with domestic issuers hovering around the +40 mark.
Wages Growth Resilient As Hopes of Imminent Rate Cuts Fade
- Australian wages grew faster than expected over the last 12 months, up 4.2%, driven by newly-implemented enterprise agreements in the public sector.
- Quarterly growth for the December quarter met economists’ expectations of an 0.9% increase on September, with a higher proportion of that growth contributed from enterprise agreements than is usually seen in a 4th quarter.
- Interest rate expectations remained largely unchanged, with a slight boost to expected cuts over the next 12 months. Money markets are now pricing in a first full cut in September, with the close-to-3 full cuts projected in late January now a distant memory.
- Judo Bank’s Composite PMI Index printed this morning at its highest level in almost a year, with higher input costs driving inflation across goods & services.