Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Covid Fears & Inflation Print To Come

Wednesday, 27th April, 2022

Daily Flows

  • We experienced stronger flows to start the shortened week, with steady activity across a range of names and terms as funding pressures and ever-rising benchmark levels push ADI rates higher.
  • An attractive opportunity is available today within the BBB domestic TD space, showing 2.20% for 1-year funds.
  • Bank of Queensland lifted their rates yesterday, and have again lifted them significantly today, now offering the highest TD rates at most levels from 4 months to 5 years.
  • Judo Bank also increased their term deposit rates, offering a highly attractive 1.05% rate for 3 months, the highest in the market.
  • ING not only maintained but lifted their already-impressive TD rates yesterday, showing 2.40% for 1-year funds.
  • Intesa Sanpaolo continue to offer a very attractive option within the NCD space across the curve, offering 0.83%, 1.42% and 2.35% for 3, 6 and 12 months respectively today.

Covid Fears

  • China’s zero Covid policy is providing a grim outlook for markets.
  • Shanghai has been in lockdown for some time now, but Beijing has recorded 22 cases within the community yesterday.
  • Whilst this accounts for just 1 in a million people having covid, it is highly likely to lead to a lockdown.
  • Markets are fearing the large disruptions that this could have on supply chains, which have just started to recover from past lockdowns.

Inflation Print

  • Today see’s Australia’s Q1 inflation print.
  • Markets are expecting an increase of 1.70% QoQ and 4.60% YoY.
  • An overshoot of expectations could place serious pressure on the RBA to hike in May. If the print is aligned with expectations, WPI in May becomes very important.
  • June still remains a very likely scenario for the first hike. Whether the hike is 15 or 40 basis points remains up for debate.

 Russia Ukraine Developments

  • Russia has halted the supply of gas to Bulgaria and Poland.
  • Russia has demanded that European counterparties pay for oil and gas in Rubles, counteracting the sanctions placed on them.
  • Countries that are not willing to comply have been threatened with being cut off, with Bulgaria and Poland the first to face this threat.

Lawrence Vosper, Nicholas Allan

Curve Team