Westpac: A$ Net Delta Reverted To Buy Side In Late April

Westpac note that “the 20-day rolling sum of net A$ flow delta was in sell-side territory in the first 20 days of April, before sentiment turned around and swung net flows into buyside territory for the rest of the month. The sell-side flows earlier in the month mainly came from derivative paying with domestic real money and funded accounts the biggest payers. That reflects the RBA outlook, with markets expecting the RBA to begin its hiking cycle as soon as this week. Breaking down the composition of investors further, the buyers later in the month mostly came from sovereign and funded accounts, and looking at the buy flows by product, we can see that it consisted of government bonds, corporate bonds and a small amount of derivative receiving. These flows align with the safe haven buying in late April from concerns regarding China’s COVID lockdowns, and derivative receivers who view the market has priced in too many rate hikes. The 3-/10-Year curve also continued to flatten slightly in April, with our flows showing large net selling in the 5- to 10-Year maturities.”