U.S. Tsys Still In Driving Seat

The earlier bid has run out of momentum, given the cross-asset, flow-based nature of the move and the pullback from extremes in the U.S. Tsy space. YM sits +10.0 & XM is +6.0 as a result.

• Local data had no discernible impact on the space.
• Retail sales ex-inflation for Q1 was marginally firmer than expected (+1.2 Q/Q vs. BBG median of +1.0%), although that was accompanied by a 0.3ppt reduction in the Q4 Q/Q reading, via revisions.
• Meanwhile, the monthly NAB business survey revealed an uptick in conditions but a downtick in confidence. The survey collator noted that “business conditions continued to strengthen in April, while confidence eased but remained above its long-run average. Trading conditions and profitability continued to strengthen, while employment was steady… Both confidence and conditions now look fairly strong across most industries, with the exception of transport & utilities and construction where cost pressures have been most acute. Capacity utilisation also continued to rise… Cost pressures continued to build, with labour cost growth up to 3.0% and purchase cost growth reaching 4.6% (in quarterly terms) - both at new highs. However, output price inflation eased with final product prices rising 1.7% and retail prices up 2.1%. Still, these rates of price growth remain high in the history of the survey and the strength in underlying costs suggests inflationary pressure is likely to continue building over coming months. Overall, the survey highlights the ongoing strength in activity and the broad-based nature of the recovery, against a backdrop of cost pressures continuing to pose a significant challenge for businesses.”