A Little Off Cheaps

ACGBs have edged lower as we have worked our way through the Sydney day, with better-than-expected retail sales data for July (+1.3% M/M vs. BBG median +0.3%) exacerbating pressure from a downtick in U.S. Tsys.

• Cash ACGBs run 8.0-17.5bp cheaper across the curve, with the 3- to 5-Year zone leading the way lower. YM is-18.5 and XM is -13.5, a little off their respective session lows. EFPs have narrowed a little, with the 3-/10-Year box steepening, while Bills run 4 to 21 ticks cheaper through the reds.
• Australian retail sales for July rose at the fastest pace in four months, with the ABS suggesting that households are continuing to spend “despite cost-of-living pressures”, raising expectations from some quarters re: further RBA tightening amidst resilient consumer spending.
• STIR market pricing re: tightening for the RBA’s Sep meeting have pared an earlier, limited blip higher, and now point to ~46bp of tightening at that meeting (an ~84% chance of a 50bp hike), a marginal change from the ~45bp observed prior to the domestic retail sales print for July.
• Looking ahead, July building approval data will headline the domestic data docket.