Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – First Rate Hike in Over a Decade?

Tuesday, 3rd May, 2022

Daily Flows

  • We experienced a much quieter day to start the week yesterday compared to the chaos of recent weeks.
  • Reference rates fell back a little with 3mBBSW setting at 0.70%, putting a halt on the recent spikes at least for the moment.
  • Macquarie attracted some steady flows after their rate increase, now showing the highest TD rates at most terms within the A rated space.
  • There are several domestic ADI’s seeking TD and NCD funding today, with levels open to negotiation to secure investment.

First Rate Hike in Over a Decade?

  • Eyes turn to the RBA at 2:30pm as Australia may see our first rate hike in over a decade.
  • The 3rd of November 2010 was the last rate hike the RBA carried out. A hike of 25 points, increasing the cash rate to 4.75%.
  • There is still debate surrounding whether RBA will hike today, but economists are predicting that Australia’s hiking cycle will commence with a 15 basis point hike.
  • If this is the case, Philip Lowe will likely answer questions after the release of the Monetary Policy Decision. The RBA’s inflation forecast is likely to be addressed, before a comprehensive release within the Statement of Monetary Policy.

Treasuries Flirt With 3%

  • The U.S. 10Yr Treasury flirted with 3% overnight, trading above it for the first time since 2018.
  • This level was not breached for long, with the 10Yr now trading at 2.98%.

Lawrence Vosper, Nicholas Allan

Associate - Money Markets