Cheaper As Retail Sales Beats Expectations

Aussie bonds have built on their earlier cheapening bias, operating a little off worst levels observed after the release of better-than-expected retail sales data for July (+1.3% M/M vs. BBG median +0.3%).

• Cash ACGBs run 5.5-15.0bp cheaper across the curve, with the 3- to 5-Year zone leading the way lower. YM is -15.0 and XM is -10.0, just above their respective session lows. The 3-/10-Year EFP box is flatter, with 3-Year EFP narrower and 10-Year EFP little changed, while Bills run 4 to 19 ticks cheaper through the reds.
• Retail sales rose at the fastest pace in four months, with the ABS suggesting that households are continuing to spend “despite cost-of-living pressures” (further details fleshed out earlier), raising expectations from some quarters re: further RBA tightening amidst resilient consumer spending.
• STIR markets now point to ~47bp of tightening at the RBA’s September meeting (pointing to an ~88% chance of a 50bp hike), an uptick from the ~45bp observed prior to the domestic retail sales print for July.