– Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Equities Tumble, Bond Yields Up

May, 9th May, 2022

We experienced another extraordinary week as the RBA hike and hawkish comments saw rates continue to elevate to historic levels.
We received the first 3.00% 1-year term deposit from a domestic BBB ADI on Friday, while an unrated name was offering a standout 1.40% for 3-month funds. Both levels were received well in the market.
3.00% 1-year NCD’s also remain available from Intesa Sanpaolo (BBB), while +20 can be found for 3-month margins.
Bonds continued their substantial sell-off throughout the week, with 5-year fixed yields surpassing 4.80%.
ANZ printed $4bn in 3 and 5-year bond issuances on Thursday. There were 3-year fixed and floating lines, pricing at 4.053% and +77 respectively, as well as a 5-year FRN at +97.

Equities saw another week of red, falling for the 5th week in a row.
This is the longest sequence of reduction in the last 11 years.
Whilst institutional investors might start to look into less risky assets, retail customers are still sticking close to equities.
For every $100 a retail customer has invested into equities over the past year, only $3 has been pulled.
It comes as retail punters face slim to no return from cash. Searching for higher yielding assets has become a must.
U.S Treasuries have also sold off, with the 10Yr Treasury trading above 3.14%, up 7 basis point. The short end also sold off, with 2Yr now trading around 2.73%.
10Yr Treasuries rose by 20 points last week.

Domestically, the data ahead is quiet.
Consumer and Business Confidence prints will reflect an apprehension now that the RBA has raised rates.
In the U.S. CPI data is released on Wednesday morning.
Markets are expecting to see a fall in CPI, down from 8.50% YoY to 8.10% YoY.
This would support the Fed’s view of only hiking 50 points, rather than the market’s discussed 75.

Associate - Money Markets