Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Employment Market Records Tumble

Friday, 15th July, 2022

Daily Flows

  • Several TD rates increased yesterday after much higher than expected inflation data out of the U.S. on Wednesday night. 3mBBSW jumped up 6bps to 2.04%, its highest level since February 2019.
  • Bank of Queensland lifted their levels across the curve to some of the best we are seeing in the market right now.
  • Several ADI’s continue to offer off-carded levels across both TD’s and NCD’s, matching competition to retain funds. As a result there are numerous otherwise unavailable opportunities showing across the market.
  • We have seen a significant lift in live bills this morning, indicating further deposit rate rises. A BBB+ rated name is this morning offering 3.55% for 6-month TD’s.

Employment Market Records Tumble

  • The latest update released yesterday points to a strong employment market pushing up against full employment.
  • Records tumbled with the unemployment rate (3.5%), participation rate (66.8%) and the employment to population ratio (64.4%) all hitting new records going back to the start of the ABS data series in the late 1970’s.
  • By the numbers for June, total employment was up by 88,400 with a health skew of two thirds of the jobs being full-time.
  • Helping the employment market to hit new records is the lack of working age population growth.
  • The net flow of people into Australia stalling over the pandemic has left a gap of almost 500,000 people compared to the rate of growth in the decades leading up to the pandemic.
  • This is evidence of the supply side impact on the labour markets.
  • Either we need to see this reverse or demand for employment slow. Otherwise we could see a spike in wage growth which will make it harder for the RBA to control inflation.

Lawrence Vosper, David Flanagan

Curve Team