– Daily Flows & Commentary BY THE CURVE TEAM –

Thursday, 19th May, 2022

Daily Flows

• The trend of strong ADI demand and a negative funding gap continued to unfold yesterday.
• Several domestic BBB ADI’s increased their 3-month NCD margins to +25 in a bid to attract investment. Judo Bank (BBB-) remain a 3-month standout at +30.
• The highest 3-month TD offer increased to 1.60%, a rate that would have been attractive for a multi-year deposit just a few short months ago.
• ING Bank attracted notable funding with 3.11% for 1-year funds, while investors chasing absolute yield showed interest in 2-year AMP TD’s, trading at 3.65%.

Wages Disappoint

• Wage growth surprised on the downside yesterday.
• The Q1 print saw an increase of 0.70% QoQ, and 2.40% YoY. The market was expecting 0.80% and 2.50% respectively.
• Whilst the market may be disappointed with the print, it places less pressure on the RBA to hike rates aggressively.
• Many economists are saying that due to the lagging nature of WPI, current wages growth is much higher than this. Likely to be within the 3% range annualised.
• In fact, within the private sector, the ABS stated that around 15% of workers have received a 3.40% increase. This is the largest rise since 2013.

Employment Data Today

• Employment data is released today. The market is expecting unemployment to fall to 3.90% and a further increase of 30,000 employed people.
• Unemployment came in at 3.95% last month, but due to rounding the read was 4.00%.
• Many economists are predicting unemployment to fall to 3.80%.