Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Housing Brings Negativity Back to Markets

Wednesday, 25th May, 2022

Daily Flows

  • Again quite a slow day yesterday, with somewhat reduced activity from both ADI’s and investors.
  • A domestic BBB name offered a standout 1.65% for a 3-month TD, while levels from other ADI’s remained largely unchanged from the start of the week.

U.S. Housing Data Suprises on the Downside

  • U.S. April new home sales fell 16.6% MoM, the largest monthly decline in 9 years.
  • New home sales have now fallen every month so far this year in the U.S. .
  • High house price inflation, falling real incomes and rising mortgage rates have driven a significant fall in housing affordability.
  • Locally, Assistant RBA Governor Luci Ellis is speaking on the Bank’s current and future expectations around the Australian housing market.

Negativity Returns to Markets

  • Markets once again took a negative turn overnight, largely off the back of the U.S. housing data.
  • Some European Central Bank members have also begun strongly encouraging a 50bps rate hikes, adding further pricing pressure.
  • There was a shift to bonds off the back of the falling sentiment, with US 10-year yields fell 10bps to 2.76%.
  • The RBNZ is expected to hike by 50bps later today to 2.00%.

Lawrence Vosper

Business Analyst