Market expectations continue to be for interest rates to remain flat for the near-term. In the face of this, financial institutions have reduced the rate...

Market expectations continue to be for interest rates to remain flat for the near-term. In the face of this, financial institutions have reduced the rate offered to depositors as they claw back margin. We would expect term deposit rates (in the absence of additional cuts to the official cash rate) to decline further over the coming year as wholesale credit markets continue to offer attractive funding sources for financial institutions. In our view, this will continue to force investors into other income producing investments and will likely result in increased demand for listed fixed interest securities. We recommend ANZPA, PCAPA and WCTPA as shorter-dated exposures and for those investors seeking longer-dated investments we recommend ANZPE, CBAPD, NABPB and WBCPD. More fixed interest analysis on the Morgans Blog: (VIEW LINK)