Daily Flows
- With minimal retracement from increases yesterday, banks have had to reprice upwards to attract funds.
- A margin of 80 basis points in the 1 year term deposits means outright offerings of 5.20% around.
- NCD Margins have stayed at +45 for 3 months, there is potential to earn +55 from foreign branch banks looking to attract funds.
Softer U.S. PPI Eases Market Concerns
- Softer US PPI data provided relief to markets after concerns raised by the CPI report regarding Fed cuts’ timing and pace.
- US producer prices rose by 0.2% month-over-month in March 2024, marking the smallest increase in three months, below the forecasted 0.3%.
- Services prices increased by 0.3%, led by gains in securities brokerage, investment advice, and related services (3.1%), while goods costs declined by 0.1%, mainly due to a drop in gasoline prices (3.6%).
- Year-on-year, the Producer Price Index (PPI) rose by 2.1%, the highest since April 2023, with the core index increasing by 0.1%, pushing the annual rate to 2.4%.
- New York Fed President Williams sees no immediate need to adjust policy, believes inflation is gradually moving towards 2%, consistent with FOMC’s cautious stance.
- The yield curve still remains elevated from movements earlier in the week. Opportunity lies in fixed longer term products with term deposits above 5.10% for 5 years.