Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Market Patient Ahead of The Data

Tuesday, 26th July, 2022

Daily Flows

  • Flow remained constant yesterday despite the impending data coming this week.
  • Investors continued to seek elevated returns from a domestic BBB Bank, offering above 3.60% for 6 months.
  • Short dated NCDs remained attractive, with margins of +30 for 3 months offering total returns over 2.50%.
  • Longer dated NCDs are providing generous returns due to the steepness of the slopes, with A rated names offering +30 for 6 months.
  • The general theme for the month has been an increase in liquidity. Banks are no longer so desperately searching for funding and price pressures have alleviated.

Market Watchful Before CPI & The Fed

  • The market has started the week patiently awaiting the data.
  • CPI data domestically is released tomorrow, with the market forecasting significant increases.
  • The Fed meet in the morning of the 28th and are expected to increase the cash rate by 75 basis points.
  • With the potential of so much volatility to come, the market is sitting tight.

Russia Stating Turbine Problems

  • After the commencement of gas flowing through Nord Stream 1 back into Germany and Europe, Russia has announced that the pipeline has a turbine issue.
  • Previously, flow was at 40% of the normal capacity. With the turbine issue, flow will be reduced to 20%.
  • No clear end is in sight to Europe’s energy crisis and setbacks like this will on exacerbate the issue.

Nicholas Allan

Curve Team