Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Inflation & Oil

Thursday, 9th June, 2022

Daily Flows

  • There was an enormous range of activity yesterday, with flows into more than a dozen individual ADI’s across the full spectrum of credit ratings and terms as numerous opportunities present themselves for investors.
  • 2.30% was available for 3-month unrated TD’s, with similar levels expected today. Further along the curve, 3.65% was offered for 12-months from a BBB+ rated ADI.
  • Bond flows remained healthy as yields continue to rise strongly this week. While TD levels have lifted strongly, relative value in bond yields has persisted. For example the June 2024 fixed NAB line was available at 4.03% yesterday, almost 40bps above their carded term deposit rate.

Inflation Spooks Markets

  • Equities pulled back again overnight as inflation worries continue to spook markets.
  • Inflation woes were further felt as oil prices continue to rise (WTI – USD122, Brent – USD123).
  • China trade data is released today and threatens to cause more market disruption and greater upward pressure on oil.
  • U.S. CPI is released late this evening and should pave the road for how aggressive the Fed will be when they meet next week.
  • More importantly, it will indicate how long the Fed will be aggressive for. 50 basis point hikes are expected for the next meeting, and likely the meeting after.
  • The ECB meet this evening, and markets will watch closely to see if they hike. Their QE program is very likely to be ended.

Lawrence Vosper, Nicholas Allan

Curve Team