A Touch Firmer To Start, After Futures Pared Losses Overnight

Light flattening of the curve has been observed early on Friday, with the major cash ACGB benchmarks running 1.0-2.5bp richer, while YM & XM run +0.4 & +1.8, respectively, after recovering from overnight lows as wider recessionary worry crept in post-U.S. retail sales data. Reaction to the latest ECB decision had provided some pressure into that release. Bills are flat to -3 through the reds.

• The latest round of domestic flash PMI readings saw a slower rate of expansion for the manufacturing sector and a sharper rate of contraction in both the services and composite readings. Survey sponsor Judo Bank noted that "the Flash PMIs for December reveal a slowdown in activity across the Australian economy as we finish 2022. The December results are one of the most up to date readings on the Australian economy and show that higher interest rates are starting to have the desired impact on activity. The Flash PMI readings for December are still well above levels that would normally be associated with recession. What we are seeing could be the first signs of a desired soft landing for the Australian economy in 2023”
• Local headline flow has been relatively light since yesterday’s Sydney close.
• Looking ahead, the local docket is empty, which will leave participants on headline alert into the weekend.