Tuesday 02 October 2018 by Leigh Winton Week in review From the trading desk What’s trading AUD & USD A limited amount of Asciano 2027 floating rate note was uncovered last week, meeting strong wholesale investor demand. With few corporates issuing investment grade floating rate bonds, they remain very popular. Supply has since been exhausted and existing holders are able to sell at an indicative margin of +204bps. Nufarm released its results last week along with an equity raising, resulting in renewed interest in the 2026 USD bond. The results affirmed earlier company guidance and the price of the bond has moved higher since its release. The bond is available to wholesale investors only and is offered at an indicative yield to maturity of 6.21%pa.The recently issued Medallion Trust 2018-1 residential mortgage backed securities (RMBS) began trading in the secondary market last week, although no supply was available. Investors continue to add floating rate exposure to portfolios, which the RMBS bonds offer. The higher rated Liberty 20162-C notes remain available to wholesale clients only. These are offered at an indicative forecast yield of 4.20%pa.Economic wrapAs expected, the US Federal Reserve raised its key interest rates by 0.25% last Thursday. More importantly, the supporting statement points to another rate hike before the end of the year, with an additional two to three in 2019. This will likely continue to put pressure on bond prices, especially for higher rated fixed rate securities.US 2Q18 GDP numbers were finalised last Thursday, at 4.2% confirming the preliminary estimate. The strong number in part reflects the full effect of tax reforms introduced earlier this year. It is expected that US GDP growth has now peaked, and its pace will slow down for the rest of the year. Full year consensus for US GDP is around 3%.The RBA board will meet tomorrow to review its cash rate. We expect no change to its monetary policies.