Daily Commentary BY THE CURVE TEAM –

Daily Insights – Overseas Investors Squeezed

9 November, 2021

Westpac Issuing Offshore

  • Yields in the US are very low, meaning Westpac has opted to raise funds in the US rather than domestically.
  • This is despite the basis swap (cost of converting funds from a foreign currency to the Australian dollar) rising recently, increasing the cost of raising funds overseas.
  • This may mean foreign investors are less active in the Australian market and foreign branches may need to raise their rates domestically in line with the alternative cost of raising them overseas.

Central Bank Comments

  • Fed speeches highlighted the inflation risks in the economy, and the need to potentially raise rates in the second half of 2022.
  • The 10 year Treasury is at 1.49%, which is still lower than levels it reached in March, when there was a spike in yields.

Josh Stewart

Associate - Money Markets