– Daily streams and comments FROM THE CURVE TEAM –
Daily streams
- Yesterday saw moderate flows but lower yields following a fall in reference rates.
- +35 offered one ADI for the 3 month NCD which compensated investors for the fall in BBSW. This special one went fast.
- Unrated ADI has revised its term deposits offering 2.70% for 3 months.
- Base rates fell again today, by a significant amount in longer terms.
US GDP misses
- For the second time in a row, US GDP turned negative in the second quarter, signaling a technical recession.
- The indicator was -0.90% year-on-year, which was expected at the level of 0.40%.
- Personal consumption data also came in weaker than expected at 1.0% versus expectations of 1.20%.
- While the effects of rate hikes take their toll, Jerome Powell has made it very clear that the Fed’s focus is on inflation.
- A “technical recession” was sharply dismissed by Powell, but the market appears to have reacted significantly to the data.
- Stocks rose, with major indexes up more than a percent. That comes as a weakening economy could mean the Fed may not have to hike as much.
- U.S. Treasuries rose overnight, falling more than 12 basis points in 10 years.
Retail data is softer than expected
- Yesterday, data on retail trade in the domestic market for June were published, which turned out to be below expectations.
- The market was calling for an increase of 0.50%, but in print it was 0.20%.
- The bulk of the increase can be attributed to an increase in cost rather than demand.
- Consumer spending may show the first signs of easing as financial conditions tighten.
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