Daily Flows & Commentary BY THE CURVE TEAM –

Daily Insights and Flows – Markets Spooked

Wednesday, 19th January, 2022

Daily Flows

  • The flow of primary issuances continued yesterday as Westpac printed $2.75bn in 5-year floating and fixed notes at +70, in line with CBA’s spread on its new issue last week. Rabobank (A+ S&P) have also just launched a 5-year bond (indicative pricing +78), which we are accepting bids on.
  • Activity into unrated ADIs remains steady but has seen some slowdown as investors reach limits. Nonetheless rates in this space remain attractive (3m at 0.60% to 0.80%) as ADIs continue to seek funding.
  • Several overseas names within the BBB+ to A+ space have come to market with strong NCD appetite this week, with rates as high as 0.20% for 3m. This is now the highest 3m NCD rate we have seen for those with room.

U.S Markets Spooked

  • U.S equities saw red overnight with growing fears over accelerated central bank tightening.
  • The Dow suffered the biggest decline since November, and the Nasdaq finished down 2.60%.
  • U.S Treasuries pushed out further, with the 10Yr touching 1.877% and now resting at 1.86%, moving approximately 9 points. The 2Yr pushed out around 7 points to 1.04%.
  • This comes as investors expect The Fed to hike 50 basis points in March.

Australian Data

  • Released today is the Westpac Consumer Confidence Index.
  • With a serious decline in the ANZ data released yesterday (97.9 down from 106.0), this print will be telling on how much Omicron has affected recovery.

The Market – At The Time of Writing

  • Key Australian Bonds
    • 2Yr – 0.885%
    • 5Yr – 1.642%
    • 10Yr – 2.010%
  • ASX200 – 7408.78
  • AUDUSD – 0.7185

Nicholas Allan

Associate - Money Markets