At Or Near Session Cheaps After Retail Sales Beat

ACGBs (YM -4.0 & XM -5.0) are weaker and at or near session cheaps after September Retail Sales surprised sharply on the upside, +0.9% m/m versus +0.3% est. and an upwardly revised +0.3% prior. “The warmer-than-usual start to spring lifted turnover at department stores, household goods and clothing retailers, with more spending on hardware, gardening, and clothing items. Also adding a boost to turnover in household goods retailing was the release of a new iPhone model and the introduction of the Climate Smart Energy Savers Rebate program in Queensland.": ABS.

• Cash ACGBs are 4-5bps cheaper on the day, with the AU-US 10-year yield differential 5bps higher at flat.
• Swap rates are 4-5bps higher on the day, with EFPs little changed.
• The bills strip is cheaper, with pricing -3 to -6, late whites/early reds the weakest.
• RBA-dated OIS pricing is 1-5bps firmer across meetings, with late’24 leading. The market is attaching a 72% chance of a 25bp hike from the RBA at next week’s policy meeting. Terminal rate expectations have jumped to 4.51% (+44bps), the highest level since mid-July.