Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Equities Tumble, Bond Yields Up

May, 9th May, 2022

Daily Flows

  • 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 Down, Bond Yields Up

  • 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.

The Week of Data Ahead

  • 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.

Nicholas Allan

Associate - Money Markets