Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow and Insights – Inflation, Employment, Earnings

Thursday, 20th January, 2022

Daily Flows

  • Rabobank (A+) came to market with yet another 5-year FRN, printing $700m at 3mBBSW+73, a few points above the major bank issuances in the past week.
  • Several domestic ADIs in the BBB to BBB+ space have been stirring strong activity across the curve, offering attractive rates as they seek funding (0.75% for 12m, 1.30% for 2 years, 1.65% for 3 years).
  • We are seeing growing activity in the NCD market, with a BBB-rated domestic name offering +20 for 3 months. Several overseas names continue to show appetite.

United Kingdom

  • United Kingdom CPI was released last night, recording a value of 5.4% Year on Year.
  • This figure has been largely halted by the energy price cap, which is revisited in April.
  • The increase in the cap will put further upward pressure on inflation.

Australia Today

  • All eyes will be on employment data which is released at 11:30am AEDT.
  • Unemployment is expected to fall by 0.10%, to 4.5%.
  • Yesterday, Westpac Consumer Confidence data was released. Whilst the reading declined from 104.3 to 102.2, it shows a strong resilience in consumers in response to Omicron.
  • In response to the Delta outbreak, consumer confidence fell 5.20%. The response to Omicron has only been 2.00%.

Markets Overnight

  • U.S Equities steadied but ended the day down. Strong earnings were released, with particular note of Procter & Gamble, along with Bank of America
  • U.S Treasuries saw strong buying activity, with yields pulling down. The 10Yr now rests at 1.83% and 2Yr at 1.02%.
  • The Aussie Bond Curve looks like:
    • 2Yr – 0.885%
    • 5Yr – 1.637%
    • 10Yr – 2.00%
  • ASX200 – 7332.50
  • AUDUSD – 0.7210

Nicholas Allan

Associate - Money Markets