Richer But Off Best Levels After Q3 Retail Sales Beat

ACGBs (YM +1.0 & XM +4.0) are richer but at Sydney session cheaps after Q3 retail sales volumes unexpectedly rose 0.2% q/q (-0.3% estimate). Q2 was revised down to -0.6% q/q from -0.5%.

• The move cheaper during the session has been assisted by US tsy futures in the Asia-Pac session. TYZ3 is dealing at 107-13+, -0-02 compared to NY closing levels. The market awaits the release of Non-Farm Payrolls data this evening.
• A reminder that cash tsys are closed in Asia due to the observance of a national holiday in Japan.
• Cash ACGBs are 1-5bps richer, with the AU-US 10-year yield differential 2bps higher at +9bps.
• Swap rates are flat to 4bps lower, with the 3s10s curve flatter. EFPs are ~1bp tighter.
• The bills strip is little changed, with pricing -1 to +2.
• RBA-dated OIS pricing is 1-2bps softer across meetings today ahead of the RBA Policy Decision on Tuesday.
• The market currently assigns a 67% probability to a 25bp rate hike next Tuesday. The recent moderation in expectations has been influenced by major central banks opting to keep their policy rates unchanged.
• Expectations for the terminal rate now stand at 4.47%, signifying an increase of 40bps by May 2024.