– DECEMBER 2021 INSIGHTS BY THE CURVE TEAM –
- The RBA kept their policy settings unchanged.
- In February they will decide whether to taper or end QE.
- There were numerous investing opportunities in TDs and NCDs as ADIs sought funds ahead of Christmas.
- The yield curve is flattening as rate hikes begin to be priced in at the shorter end and the subsequent drag on economic activity is priced in for longer tenors
- Although ADIs remain very liquid, the past month gave a glimpse of the investing environment when there is a negative funding gap.
- As ADI liquidity positions normalise to pre covid conditions, investors will have more bargaining power.
- The economy is poised to recover strongly in the new year as covid restrictions are eased.