Futures Richer But Off Post-Retail Sales Highs, Q4 CPI Tomorrow

ACGBs (YM +3.0 & XM +6.5) sit stronger but below session highs sparked by the release of weaker-than-expected December Retail Sales data. The move away from the session’s best levels likely reflected the fact that at least a part of December’s weakness was related to shifting spending patterns between December and November.

• Notably, afternoon weakness in ACGBs comes despite an extension of yesterday’s US tsys rally in today’s Asia-Pac session. Cash US tsys are currently dealing flat to 3bps richer, with a flattening bias.
• Cash ACGBs are 3-6bps richer on the day, with the AU-US 10-year yield differential 1bp wider at +10bps.
• Swap rates are 1-5bps lower, with the 3s10s curve flatter.
• The bills strip is dealing mixed, with pricing -1 to +2.
• RBA-dated OIS pricing is little changed across meetings. A cumulative 44bps of easing is priced by year-end.
• Tomorrow, the local calendar sees Q4 CPI print. This will be a crucial input into deliberations at next week's RBA meeting. Bloomberg consensus is expecting headline CPI to print +0.8% q/q and 4.3% y/y versus +1.2% and 5.4% prior. Trimmed Mean CPI is expected to show +0.9% q/q and 4.3% y/y versus +1.2% and 5.2% prior.
• Tomorrow, the AOFM plans to sell A$800mn of 3.75% 21 May 2034 bond.