Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Analysis of Low Interest Rate Environment

Tuesday, 28th June, 2022

Daily Flows

  • ING Bank lifted their TD rates yesterday, showing 3.95% for 1-year funds. This is now significantly the highest rated name in the A rated bucket and the equal highest in the broader market.
  • A BBB+ ADI came to market looking for longer funds, pricing around 4.30 and 4.50% for 2 and 3-year TDs respectively with room for negotiation to secure funds, in trend with many other ADI’s currently seeking investments.
  • NCD flows were quiet despite a +40 3-month special, with many investors in this space perhaps laying low until year-end.
  • We are currently seeing large volumes of shorter dated semi-government floating bonds available, a relatively harder to find product that carries an attractive risk weighting and investment flexibility.

RBA Draft Paper To Be Released

  • Today sees the release of the RBA’s draft paper of ‘The Causes, Challenges and Consequences of the Low Interest Rate Environment’. 
  • The paper is expected to be a frank digest of the past 2 years of monetary policy decisions and how this may impact the future trajectory of the Australian Economy.
  • Little further knowledge is expected to be gained into the inflationary forecast and dilemma that Australia is currently facing, but it may provide an honest admission as to how necessary, or unnecessary, the extreme environment we placed ourselves in.

Russia Defaults on Debt

  • Russia defaulted on a sovereign bond payment for the first time in more than a century.
  • However, it is not due to them not having the funding, rather that they are unable to make payment due to the sanctions placed on them.
  • This news was not a surprise to the market but does highlight that this may become more prevalent moving forward.

Lawrence Vosper, Nicholas Allan

Curve Team