Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flows and Insights – Supermarket Supply Crunch

Thursday 6th January, 2022

Daily Flows

  • Things continue to steadily return coming out of the Christmas break, with flows into TDs across the credit spectrum, with particular interest around the 3 month term.
  • NCD activity is also returning strongly, with Judo Bank a stand-out, now offering a market-leading 1 year rate of +45.
  • We continue to see strong activity in bond markets, with a broad range of offers at volume. Suncorp lines (now rated AA- from S&P on par with the majors) are offering particular relative value for the credit rating across the curve (July 2024 trading at +46).

Supermarket Supply Crunch

  • A constant theme surrounding the Covid-19 has been the hinderance of supply chains. This coupled with panic buying has left supermarket shelves barren a number of times.
  • With the rapid spread of Omicron throughout Australia, but particularly on the East Coast, a vast percentage of the population are required to isolate, either through having the virus of being a ‘close contact’.
  • In particular, the latest supermarket supply crunch has come from key workers having to isolate. Australian Container Freight Services, one of Australia’s largest trucking companies is suffering from 25-50% of staff in isolation.
  • Australian Container Freight Services supplies Coles, Aldi, Kmart, Bunnings, and more.

Fed Minutes Spark Volatility

  • U.S. Equities sold off overnight as the Federal Reserve minutes pointed to the prospect of a quicker than anticipated series of interest rate increases.
  • The VIX index, which tracks futures contracts, is a well known metric as a ‘fear gauge’. This leaped 17% to 19.85 as market sentiment changed in response to the minutes.

Nicholas Allan

Associate - Money Markets