– Daily Flows & Commentary BY THE CURVE TEAM –

Thursday, 12th May, 2022

Daily Flows

• Flows were significantly stronger than usual yesterday, a continuation of recent trends we have seen with more and more ADI’s coming to market for both TD and NCD funds.
• We saw investments into term deposits across numerous domestic ADI’s and on terms from 1 month out to 2 years. Activity was mainly centred around 3 and 12-month terms though, with the highest traded rates 1.35 and 3.08% respectively.
• NCD flows were steady. Domestic margins remain around +20, while +25 is available from foreign names.

U.S. Inflation Surprises

• Headline inflation eased, yet core inflation rose.
• The read disappointed on the upside, as core inflation printed at 0.60% MoM. Expectations were for 0.40%.
• Headline inflation eased to 8.30% from 8.50%.
• Equity markets fell overnight, as the market continues to fear inflation pressures and further increases to interest rates.
• Treasuries sold off initially, before finishing strongly, especially in the long end. The curve flattened overnight as the short end was not able to recover from the initial selling pressure.
• Price action reflects the market expecting a more aggressive Fed stance, to try and combat inflation more quickly.

Australian Consumer Confidence

• Consumer confidence fell overnight, to the lowest levels since August 2020.
• The fall is largely due to consumers feeling the burden of an interest rate hiking cycle and facing larger price pressures due to inflation.
• Confidence among people who have a home loan fell 5%. The week before saw a 9.60% decrease too.
• Renters saw an increase of 2.60%. This is despite potential price pressure given the rise in mortgage repayments.