Daily Flows
- Domestic retail sales was released yesterday morning. The results were not jarring and did not prompt any large movements in the interest rate markets.
- There has been significant flow from ADI’s into the securities and NCD space as liquidity has returned to the market.
- CBA’s recent bond issuance continues to be traded heavily in the secondary market across both fixed and floating tranches.
Retail Sales Rebounds But Downward Trend May Continue
- Retail Sales increased by 0.5% MoM in July, growing by market expectations of 0.3% and a strong reversal from the 0.8% decline last month.
- This stronger than expected print may have been propped up by increased spending while the FIFA World Cup was on.
- Although retail sales have not fallen off a cliff, in real terms household spending has been significantly down.
- Private baking data also suggests that consumers are feeling the pinch and cutting back on spending.
- With weak consumer confidence & fixed rate mortgages rolling off, some households will have to reduce budgets and spending for the remainder of 2023.
- The data does not seem enough to warrant a change in stance on monetary policy either way.
- The RBA will continue to monitor data as it comes in and react responsively if needed.