Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Data to Dictate The Day

Tuesday, 2nd August, 2022

Daily Flows

  • Yesterday’s bank holiday saw heavily reduced flows.
  • Reference rates are looking likely to increase today. Investors will be rewarded at the front end of the curve.
  • 1Yr rates will appear less generous as the swap rate has rallied 30 points since Wednesday last week.

Raft of Data To Come

  • Today we have a raft of data released, most notably the RBA who are meeting at 2:30.
  • The market are still pricing a 47 basis point increase today. Most likely the RBA will hike by 50 basis points.
  • However, today we also see Home Loans Value MoM, Investor Loan Value, Owner-occupier Loan Value and Building approvals, all for the month of June.
  • All of which are expected to see significant negative prints, as the recent rate hikes impact the market.
  • The housing market is showing the initial signs of an overdue slowdown, with prices falling rapidly in major cities.

U.S. Curve Inverts Further

  • Last night saw the U.S. Curve invert further as the 2Yr sold off and the 10Yr rallied.
  • The 2Yr now trades around 2.93% while the 10Yr trades at 2.58%.
  • Fears of recession are growing and the data is starting to echo that inflation may be starting to peak.
  • There is every chance that central banks may be hiking to cut inflation at a time when inflation is starting to subside. If this does come to fruition, economies around the world may be severely impacted.

Nicholas Allan

Senior Associate