Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – U.S. Inflation Yet To Peak

Tuesday, 14th June, 2022

Daily Flows

  • We return today after the Queen’s Birthday long weekend. It is looking to be a big day and week ahead after U.S. inflation data and ongoing uncertainties over the weekend rattle the market.
  • Strong opportunities remain available, with rates moving rapidly upwards off the back of the steep reference rate moves and funding pressures. +30 is available from numerous ADI’s for 3-month NCD’s, while 6-month term deposits are nearing 3.00%!

U.S CPI Surprises

  • Friday saw the release of CPI data from the United States.
  • The print came in much higher than expected, rising 1.00% MoM, compared with 0.70% expected.
  • YoY data overshot by 0.30%, coming in at 8.60%.
  • Core inflation (CPI Ex Food and Energy) saw a slight decline from the prior read (6% current versus 6.20% prior). However, this still came in above expectations.
  • The U.S. yield curve sold off strongly in response to the data. The 10Yr treasury rose sharply, to 3.36% – a 32 basis point increase. The 2Yr also sold off strongly, now trading at 3.49%.
  • The U.S. Dollar continues to soar. The Australian Dollar is now trading below 70 U.S. Cents, which was above 72 on Friday.
  • Consumers are feeling the burden of inflation, expecting their spending to increase by 9% over the next year. This was 8% in the April Survey.

Business Conditions & Confidence

  • Today business conditions and confidence will be released.
  • The print will be very insightful to see how the RBA’s latest move has impacted consumers and the local environment.

Lawrence Vosper, Nicholas Allan

Curve Team