Daily Flows & Insights – U.S. PMI Indicates Economic Cool Down; Will This Change The Feds Path Ahead? 

Daily Flows

  • Yesterday, the TCV 2031 Benchmark bond was settled at 3mBBSW +42, with the order book initially standing at 2.35 billion before narrowing down to a final size of 2.00 billion.
  • With the TFF’s final repayment window approaching, ADIs are actively seeking to reinforce their cash reserves through TD and NCD products.
  • As a result, we’re observing tailored offerings such as 5.21% for 12-month TDs and nearly 6mBBSW +65 for 6-month NCDs.

U.S. PMI Indicates Economic Cool Down; Will The Feds Path Ahead?

  • Overnight, the U.S. PMI registered a four-month low across Composite, Manufacturing, and Services sectors, with the composite index at 50.9, suggesting a potential economic slowdown.
  • New order inflows experienced their first decline in six months, while employment contracted for the first time since June 2020, reflecting weakened demand amidst elevated interest rates and inflationary pressures.
  • The U.S. services sector reached a five-month low, with slight contraction in manufacturing, indicating a softening in price pressures.
  • Despite the Fed’s commitment to maintaining higher rates to curb inflation, market sentiment responded, seeing pricing move to a 53% likelihood of a rate cut as early as July.
  • This data alone is not enough to warrant a change in sentiment from the Fed, however is similar results persist it could shift the current monetary policy outlook.
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Curve Team
Jack Pedersen