Richer, Narrow Ranges, Retail Sales On Monday

ACGBs (YM +4.0 & XM +7.5) are richer, mid-range, after subdued dealings in the Sydney session. With the domestic data docket light today (Q3 PPI the only release), local participants have been on headlines and US tsys watch. US tsys ~1bp cheaper in today’s Asia-Pac session, after yesterday’s strong rally.

• Cash ACGBs are 4-7bps richer, with the AU-US 10-year yield differential 4bps higher at -6bps.
• Swap rates are 2-6bps lower, with the 3s10s curve flatter.
• The bills strip is slightly richer, with pricing flat to +3.
• RBA-dated OIS pricing is 1-4bps softer across meetings. The market currently attaches a 67% chance of a 25bp hike at November’s policy meeting. Terminal rate expectations sit at 4.45%, the highest level since late July.
• Next week, the local calendar sees Retail Sales on Monday, followed by Private Sector Credit, CoreLogic House Prices and Judo Bank PMIs on Tuesday.
• On Wednesday, the AOFM plans to sell A$800mn of the 4.50% Apr-33 bond.
• AFR reports that “Investments managed by the Future Fund slid a half percentage point in the September quarter to $205.2 billion as Australia’s sovereign wealth fund readied itself for further inflation and the potential for the Middle East conflict to escalate into a regional war.” (See link)