Daily Flows

• As the yield curve retraces from lows earlier this week, today market participants will see an increase in longer-term yields.
• In fixed income, market participants opted to duration via floating BBB+ bonds, where credit spreads had widened due to recent increases to uncertainty. The Newcastle Perm floating 2029 bond saw elevated flow.
• The remaining steepness of 18 basis points between 3-month and 6-month BBSW continues to see investors favour the 6 month tenor.

Weak Treasury Auction Keeps Markets Alert

• In an effort to bring market stability, the BOJ Governor stated that the central bank would not raise rates until financial markets were stable. This drove down the yen and saw some confidence return to the market.
• While confidence in the equities market is returning, weak demand in a U.S. Treasury auction has kept everyone on alert.
• The U.S. Treasury issued $42 billion of 10-year paper at a yield of 3.96%, met by weak demand.
• Although there is calmness now, markets will be on high alert for any data revealing the health of the economic outlook.
• One indicator reflecting demand and economic strength is the cost of dry shipping, which has been trending upward this year.