Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Construction Data Disappoints

Thursday, 26th May, 2022

Daily Flows

  • Yesterday was another relatively standard day. 1.65% 3-month TD’s remains available, with 3.15% still the best on offer from multiple names in the 1-year space.
  • A BBB rated domestic ADI came to market seeking 18-month funds at 3.35%, and largely open to negotiation. This is a clear trend we have seen of late with ADI’s highly flexible on pricing to secure necessary funding.
  • NAB launched new 3-year fixed and floating lines, printing a total of $2.75bn across the two tranches, with a notable skew towards the FRN. The fixed priced at a yield of 3.9535% while the FRN had a margin of +90. Both lines stirred strong interest from our investors at these attractive levels, again with favour towards the floating line.

Construction Data Disappoints

  • Australian construction work done fell 0.9% for the March quarter, significantly lower than market expectations around +1.00%.
  • The fall was largely driven by Queensland (-4.4%) and NSW (-1.6%) after the sever disruptions caused by the Omicron wave and the flooding crisis.
  • Construction is predicted to drag on the nation’s GDP as capacity constraints begin to bite.
  • Construction costs rose by 2.4% QoQ, the largest quarterly rise since 2008.

BBSW Continues to Rise

  • Reference rates continue to march upwards, with 3mBBSW today reaching 1.09%, its highest level since July 2019.
  • This has partially been driven by a building negative funding gap, with bank lending rates remaining strong and investor funds growing more scarce, at least at the lowly rates we have become used to over the past 2 years.

Lawrence Vosper

Business Analyst