Markets rallied further, continuing the theme of 2019 with the ASX200 up 2% over the month and a tightening of 9bps and 1bp occurred in the Australian iTraxx and Sovereign curves respectively. On the domestic front, there was mainly negative news for savers as first quarter inflation printed exactly flat at 0.0%, significantly increasing the implied probability of two RBA rate cuts to ~90%, which will eventually trickle through in the form of lower average funding costs for banks, but largely offset by significant earnings. In conjunction with this, a continued decline in wholesale funding costs has seen BBSW rates return closer to their long-term average, further dampening bank’s appetite for deposit funding. Globally, overarching themes were mostly unchanged, with geopolitical tensions continuing to delay investment, trade and subsequently manufacturing as barriers for global growth persist. Figure 1. Term Deposit Spread Over Relevant BBSW: April 2019 v March 2019 Source: RBA, BondAdviser For full details, charts and commentary, please click here for the full pdf version.