– Daily Flows & Commentary BY THE CURVE TEAM –

Monday, 20th June, 2022

Daily Flows

• We saw very strong activity last week as significant market volatility and ADI competition persists. There were particularly notable flows earlier in the week after historic lifts in rates following market-moving inflation data from the U.S..
• Rates stabilised through the second half of the week, although numerous ADI’s have remained seeking limited investor funds.
• The BBB+ rated Australian Unity Bank was a standout, offering an 11-month rate significantly above 4.00%, an enormous leap in TD levels from just a few short months ago.
• Judo Bank increased their term deposit rates in the second half of the week, offering 2.25% for 3-month funds, drawing in steady funding.
• Several ADI’s offered +30 for 3-month NCD’s, with outright levels becoming increasingly attractive on the back of ever-rising reference rates. 3mBBSW has risen almost 60bps over the last 2 weeks, reaching 1.80% on Friday, its highest level since March 2019.
• FRN’s have shown increasing value over recent weeks for the same reason, with a range of appealing lines available across the curve and different credit ratings.

RBA Review

• Treasurer Jim Chalmers has rejected Governor Lowe’s wishes for a joint RBA-Treasury review into the Reserve Bank, instead opting for an independent investigation from a team of domestic and international experts.
• The review comes after scrutiny over the RBA’s pre-pandemic policies and incorrect forward guidance through COVID-19, when they stated that the cash rate would not rise until at least 2024.
• It will also explore several deeper facets of the central bank’s framework, including the appointment and composition of the decision-making Board.
• The report is estimated to be finalised by June next year.

Data for the Week Ahead

• It is a big day for local data on Tuesday.
• The RBA will be releasing an internal review on the pandemic-era yield curve control tool, we get minutes for the June meeting and Governor Lowe speaks on the economic outlook.
•  NSW and QLD state budgets are also released on Tuesday.
• ANZ Consumer confidence data on Tuesday. This will be watched by the market after the RBA’s post-meeting statement last week that household consumption would be a key variable in determining their monetary policy decisions through the year.