Daily Flows & Commentary BY THE CURVE TEAM –

Dwelling Approvals Up – Well, On Face Value

Tuesday, 5th July, 2022

Daily Flows

  • Trades were strong yesterday but without too much of particular note, as numerous ADI’s continue to seek funds. A BBB+ ADI offered 3.40% for 7-month term deposits, while another BBB+ name gained some traction with 2.50% for 3-month funds.
  • There is an apparent disconnect in the NCD market with Judo Bank remaining a standout at +40 for 3-month NCDs, with most of the market pricing around +30.

Dwelling Approvals Up – Well, On Face Value

  • Yesterday saw the release of dwelling approval data, which was up 9.90% for the month of May.
  • However, the recent data has been highly volatile. January was -27% down, Feb increased by 42%, and March saw a -18.5% print, and April decreased by -2.4%.
  • With data being so volatile it is hard to say that dwelling approvals actually saw an increase.
  • Actually, when tracking the changes over the months, approvals have fallen approximately 10% over this period.
  • With the current inflationary pressures within the construction industry and increases in mortgage repayments, the outlook for dwelling approvals is poor.

RBA to Meet Today

  • The RBA will decide the monetary policy setting, today at 2:30 – an announcement that will be greatly watched by the market and many households in Australia.
  • Markets are pricing a 40 basis point hike, yet the majority of economists are calling 50 basis points.
  • Lowe has dismissed a 75 basis point hike, despite there being some calls to follow the U.S. with a similar hike.

Lawrence Vosper, Nicholas Allan

Curve Team