– Daily Flows & Commentary BY THE CURVE TEAM –

Wednesday, 20th April, 2022

Daily Flows

• ING term deposit rates increased massively yesterday, offering 2.21% for 12-month funds, more than 20bps above the next-highest rate in Judo Bank and almost 50bps above their available rate last week. Rates at other terms were also extremely attractive, with 3.09% and 3.83% for 2 and 5 years respectively. As expected, flows into ING were very strong yesterday as a result. It is unknown whether these rates will remain available today.
• NCD and FRN flows were steady as these securities become increasingly attractive off the back of ever-rising swaps. 6mBBSW may reach 1.00% today, a level that hasn’t been seen since January 2020.

RBA Minutes

• The RBA minutes provided further clarity on the outlook of the Australian economy.
• The key messages were:
  • Inflation will be driven by food and fuel prices in the coming quarters.
  • Q1 core inflation will breach 3%.
  • Large uncertainty surrounding labour costs at low unemployment.
  • Wage growth and faster CPI likely brings forward the first rate hike.
  • Growth still remains positive this year and next despite contractionary monetary policy.

Treasuries and Equities Up

• U.S. treasuries pushed out again overnight, with the 10Yr now trading close to 3%.
• The entire curve moved out in varying degrees. The 2Yr now trades at 2.60%.
• Equities also increased overnight on the back of strong earnings and increased commodity prices.