– Daily Flows & Commentary BY THE CURVE TEAM –

Thursday, 7th July, 2022

Daily Flows

• Trade activity picked up again yesterday after Tuesday’s RBA decision.
• Judo Bank remain a standout on rate as their elevated levels remain unchanged, offering 2.60, 3.35 and 4.17% for 3, 6 and 12-month TD’s respectively. These are the highest rates we are seeing in the market across the curve.
• Their NCD’s are also disconnected from the rest of the market at +40 for 3 months, although BBB+ rated ADI’s saw some significant flows with margins as high as +35.
• Macquarie Bank decreased their TD rates in line with several other ADI’s, dropping their <$1m 12-month rate by almost 50bps. This now makes ING a clear standout in the A rated bucket, showing 3.90% at the 1-year term.

Fed’s Hawkish Minutes

• The FOMC minutes were released overnight and the Fed resonated their hawkishness.
• Inflation is the core concern for the the Fed currently, who are wanting to combat it before it remains at elevated levels.
• The minutes stated an “even more restrictive stance could be appropriate if elevated inflation pressures were to persist”.
• Further rate hikes are expected, but questions remain whether the magnitude will stay at 75 basis points or start to subside.
• Anchoring inflation expectations is the key role of the Fed, who are fearing that the market is running away and driving inflation further.

Trade Balance Data

• Trade balance data is out today at 11:30.
• The market is expecting a slight increase in the surplus to $10.8b.