– Daily Flows & Commentary BY THE CURVE TEAM –

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%.