Over the past couple of days, longer swap rates have sold off, with the 5 year climbing for 4.12% to 4.20%.
Depending on the nature of the RBA interest rate announcement this afternoon, this sell off could retrace.
A couple of BBB names have come to market for TD funds. Market participants with funds to place have been rewarded with bespoke offerings across the curve.
NCD margins remain at +45 with activity quiet yesterday.
Weaker Business Data and Cooling Inflation
Corporate profits for Q2 2023 fell by 13.1%, the biggest decline since records began in 1994.
Westpac did note however, excluding the mining sector the fall was only 5.8%.
Inventories also fell unexpectedly by 1.9% in Q2 2023, missing the expected increase of 0.4%.
The Melbourne Institute Inflation Gauge showed an easing of prices, marking the 12th monthly increase.
The weaker economic data and cooling inflation will serve as good news for the RBA and could contribute to dovish rhetoric at this afternoons meeting.
Labour Demand Remains Persistent
Yesterday, ANZ-Indeed Job Ads MoM increased by 1.9%, jumping from last months growth of 0.7% MoM.
Keeping in mind the previous 5 months were negative or 0, this has been the strongest rise in job ads since June 2022.
On an annualised basis, job ads have decreased by 7.7% but are still 52% higher than pre-pandemic levels.
Labour demand seems to remain persistent, despite the July Labour data shows an increase in the unemployment rate.
The tight labour market continues to remain an area of concern for the RBA as it could contribute to wage increases and feed into price setting by firms.
However, with inflation on the right track it seems they are happy to monitor and react to the data accordingly at this stage.