Cheaper Ahead Of The Weekend

Aussie bonds drifted cheaper in early Sydney dealing and never looked like recovering, as futures added to overnight session losses, albeit while remaining in confined ranges. YM trades -4.0 & XM is -5.5 as we work towards the Sydney close. Super-long ACGBs are ~7bp cheaper on the day. EFPs are a touch wider, with a parallel shift in 3s and 10. Bills un 2-7bp cheaper through the reds.

• Retail sales growth slowed a touch in April when compared to March, although a virtually in line with expected headline M/M reading, coupled with the fact the print represented another record level of turnover, allowed some to focus on the relative strength of the Australian economy (which the RBA is relying on after recently embarking on a tightening cycle).
• The recent stabilisation in wider core FI markets, still elevated (in terms of recent history) outright yield levels & potential for cross-market demand vs. the likes of the U.S. Tsys seemingly combined to result in a firm round of ACGB Jun-31 supply. The weighted average yield printed 1.14bp through prevailing mids (per Yieldbroker), with the cover ratio printing at a very healthy level, just shy of 3.50x.
• The AOFM’s weekly issuance slate revealed a step up in note issuance, albeit to “only” A$2.0bn, while there will only be one ACGB auction next week, for an easily digestible A$1.0bn of ACGB Apr-25.
• GDP data (Wednesday) headlines the domestic docket next week, with the final round of partials due on Tuesday. We will also get private sector credit readings (Tuesday), CoreLogic house price data (Wednesday), the monthly trade balance print (Thursday) & housing finance data (Friday).