Daily Flows & Commentary BY THE CURVE TEAM –

Daily Insights and Flows – Businesses Feel The Pain

Friday, 14th January, 2022

Daily Flows

  • Market activity continues to heat up, with ongoing strong interest at shorter tenors as broader uncertainties persist.
  • The TD space has become more exciting as an unrated ADI came to market with some attention-grabbing rates (0.80% for 3m and 0.90% for 6m). Other names in the unrated and BBB space continue to seek funds at these potentially elevated rates.
  • NCD activity has been very fluid with numerous names coming in and out of the market with specific funding targets. Rates have remained relatively stable with the majority of activity around the 3 month term.
  • We are seeing steady activity in bonds, with both buyers and sellers looking to engage in the market. There continues to be pockets of relative value across the curve for those with capacity.

Businesses Feel The Pain and Told to Brace

  • Major Banks have told business that they will need to “tread water” for the coming weeks as consumers remain cautious, government stimulus is missing, staffing is troublesome and supply chains cause headaches.
  • It comes as consumers put themselves into ‘voluntary’ lockdown, picking and choosing what they deem worthwhile to expose themselves.
  • As Omicron runs rampant through Australia (with NSW recording close to 100,000 cases today) businesses are struggling with staff needing to isolate, either having the virus or being a close contact.
  • Supply chains are so heavily affected that even KFCs around Australia are having to offer reduced menus.
  • Judo Bank chief executive, who is well poised to comment given Judo’s large exposure to small businesses, has said that Omicron is worse than any other Pandemic Wave.
  • Healy has also been heavily vocal about the lack of government support businesses are receiving, as city centres become more desolate than ever.

U.S Economic Data

  • The Producer Price Index (PPI) December reading increased 0.20% to 9.7%. The core measure, which excludes food and energy was up 0.50% to 8.30%.
  • Initial jobless claims rose by 23,000 to 230,000 over the past week.
  • Markets were immune to the data, with treasury yields pulling in a couple of points, resting at 1.70%.
  • AUD slightly softer this morning

Nicholas Allan

Associate - Money Markets