Free Trial

Cheaper After Stronger-Than-Expected Retail Sales

AUSSIE BONDS

ACGBs sit 4-5bp cheaper (YM -6.0 & XM -4.0) after retail sales for May printed significantly stronger than expected at +0.7% m/m versus expectations of +0.1%. The ABS noted that the solid rise was driven by higher food and restaurant spending as well as “a boost in spending on discretionary goods”, which is in contrast to consumer surveys. People took advantage of discounting in the month and seem prepared to spend at the right price.

  • Ahead of the July 4 RBA meeting, labour market and retail data were stronger but headline inflation lower with stickier core. It is likely to be another “finely balanced” decision.
  • Cash ACGBs are 4-6bp cheaper after the data with the AU-US 10-year yield differential +6bp on the day at +18bp.
  • Swap rates are 4-6bp higher after the data to be 4-7bp higher on the day with the 3s10s curve flatter.
  • The bills strip has bear flattened with pricing -8 to -4.
  • RBA dated OIS pricing is 3-6bp firmer across meetings after the data with Dec’23/Feb-24 leading. The market now attaches a 45% chance of a 25bp hike in July versus 31% yesterday.
  • The local calendar is scheduled to release May Private Sector Credit tomorrow.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.