Richer, Limited Reaction To Retail Sales Data

ACGBs (YM +4.0 & XM +6.5) are slightly stronger after the release of weaker-than-expected December Retail Sales data. Retail Sales printed -2.7% m/m versus expectations of a fall of 1.7%.

• Ben Dorber, ABS head of retail statistics, said: "The large fall in retail turnover in December was caused by a fall in discretionary spending. Consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales."
• “This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November."
• The week’s main focus however is likely to be the Q4 CPI print tomorrow, which comes before next week's RBA meeting.
• Elsewhere, US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s solid gains.
• Cash ACGBs are 4-7bps richer on the day, with the AU-US 10-year yield differential unchanged at +8bps.
• Swap rates are 3-5bps lower, with the 3s10s curve flatter.
• The bills strip has bull-flattened, with pricing +1 to +4.
• RBA-dated OIS pricing is little changed after the data but 2-5bps softer across meetings beyond March. A cumulative 48bps of easing is priced by year-end.