– Daily Flows & Commentary BY THE CURVE TEAM –

Monday, 16th May, 2022

Daily Flows

• Friday saw quiet flows. Perhaps the back to back 5 day weeks take their toll on the market.
• A raft of primary issues were released on Friday. Most notably was a Members Banking Group 3Yr FRN which priced at +125. Only $55m was issued.
• Westpac issued a 3Yr covered fixed and floating line, along with a 5Yr FRN.
• In total, $3b was issued across the lines. Margins were 73 and and 105 for the 3Yr and 5Yr floating lines. The 3yr fixed saw a yield of 3.87%.
• We expect to see a flurry of activity this week with a strong bid tone within the market.

U.S. Consumer Confidence

• U.S. Consumer confidence hit record lows, a preliminary reading has shown.
• The read was expected to be 64, but the print actually came in at 59.1.
• Inflation, petrol prices and mortgage rates were the largest contributors, the survey showed.
• University of Michigan’s survey also highlighted that consumer expectations of inflation remained at 5.40% YoY, while longer term inflation was expected to be 3%.

China Loan Growth

• Plummeted. New loans were down significantly in April, with only 645b Yuan issued. For comparison, March saw 3.1 trillion.
• The People’s Republic Bank of China suggested that lockdowns were the cause. However, the last year has seen a downturn in activity. Evergrande, for example.
• Further, China’s zero covid policy seems likely to remain, and for sometime as seen as the retraction from hosting the Asian Championship Soccer tournament next year.
• Supply chain disruptions will remain as long as this policy is in place.