Richer, Narrow Ranges, Awaiting US Payrolls Data

ACGBs (YM +1.0 & XM +4.5) are richer but near Sydney session cheaps after Q3 retail sales volumes unexpectedly rose 0.2% q/q in Q3. This was stronger than expected (consensus -0.3%), although the Q2 dip was revised down a touch to -0.6%. It was the first rise in quarterly retail sales volumes since Q3 last year.

• With cash tsys closed in Asia due to the observance of a national holiday in Japan, the local market traded in a narrow range in the latter part of the session ahead on US Non-Farm Payrolls later today.
• Cash ACGBs are 2-5bps richer, with the 3/10 curve flatter.
• Swap rates are 1-5bps lower, with EFPs little changed.
• The bills strip is slightly mixed, with pricing +/-1.
• Looking ahead to next week, the local calendar sees Melbourne Institute Inflation Gauge and ANZ-Indeed Job Advertisements on Monday, ahead of the RBA Policy Decision on Tuesday. Bloomberg consensus is almost unanimous (21/24 economists polled) in expecting a 25bp hike to 4.35% at next week’s meeting.
• RBA-dated OIS pricing assigns a 69% probability to a 25bp rate hike next Tuesday.
• Next Wednesday, the AOFM plans to sell A$800mn of the 2.75% Jun-35 bond.
• TCorp announces that it has increased the existing 3.00% Mar-28 benchmark bond by A$600mn via reverse enquiry.