Daily Commentary BY THE CURVE TEAM –

Daily Insights: Covid Carnage Domestically and Overseas

17th of August, 2021

Covid Havoc

  • Northern Territory has gone into a 72-hour lockdown, joining the ACT, Melbourne, and NSW.
  • CBA sees the Australian Government 10-year bond at 1% as a result of the lockdowns. They are currently at around 1.16%.
  • Continuous outbreaks and lockdowns will almost certainly result in a drop in GDP for Q3.
  • Optimism of a strong bounce back remains, with ANZ saying delta is merely delaying a strong uptick in activity.
  • As mentioned over last week’s commentaries, we believe this optimism is not entirely warranted as we move to living with covid rather than zero covid.

US Consumer Confidence

  • Plummeted to 70.2 from 81.2.
  • Rising covid cases and waning government support payments are thought to be the primary causes.
  • A small business survey last week showed over 20% have seen revenue drops due to delta.
  • This could delay Fed tapering.
  • Like Australia, there is a divide between those who are vaccinated and those who are not.
  • In America’s case, political party preference is a strong predictor of vaccine attitudes, with Republicans much more vaccine hesitant than Democrats.

NAB Comes to Market

  • Since the TFF, primary issues of senior unsecured debt have been rare.
  • NAB has launched a 5 year with a margin of +47 indicatively.
  • If recent primaries are any guide, this will likely come in by 5 or so points.
  • Nonetheless, it poses a great opportunity

Josh Stewart

Associate - Money Markets