BBSW Dynamic Lends Support

Several desks that we have spoken to pointed to today's record low fixing for 3-Month BBSW as the supportive factor for the shorter end of the Aussie curve during Sydney dealing, and a possible driver of receiver side flows in the swap space, all of which stems from the RBA's ultra-loose monetary policy settings pumping liquidity into the system (surplus funds lodged on E/S accounts at the RBA have moved towards all-time highs in recent days), with 3-Year ACGB yields registering a fresh all-time low in the process, at 0.091% (per BBG generics). YM finished +2.0, with XM +1.0 as result, while swaps were generally narrower across the curve.

• Elsewhere, a stronger than expected domestic retail sales data reading for the month of November was driven by some transitory factors and COVID-19 related state divergence (strong for Victoria, weaker for South Australia).
• Sydney's new COVID case numbers moderated and are trending in the right direction, which will of course be welcomed.
• Private sector credit figures and preliminary trade balance numbers headline locally on Wednesday.