Daily Flows

• Today, Heritage and Peoples Choice has launched a 3 year senior secured MTN with an initial price guidance of +165.
• Yesterday, those venturing into the Unrated space were rewarded with 5.15% for a 6 month term deposit.
• The NCD market remains stable, with +40/+45 remaining the going rate.

Retail Sales Reflects Changing Consumer Behaviour

• Domestic retail sales came in at -2.7% for the Month of December. The market was expecting a negative print but not to this degree (expected -0.1%).
• This negative print can be attributed to a shift in consumer behaviour, as Black Friday gains popularity, moving traditionally spending periods away from December towards November.
• Looking at retail sales from September – December, consumer spending remains relatively weak and will serve as a sign to the RBA that demand side pressures are easing.

U.S. Economy Remains Resilient Ahead of FOMC

• The U.S. economy is showing significant resilience in spit of tight financial and monetary conditions.
• Although the Job Openings was a minimal change, it still indicates that the job market is holding steady.
• Consumer confidence is the highest it has been since the end of 2021 and GDP growth came in much better than forecasted last week.
• This positive data may have the Fed weary of an inflation flare-up but also signal that a ‘soft landing’ may be achievable.
• Looking ahead, this may prompt the FOMC to deliver a hawkish speech tomorrow in an attempt to keep financial markets tight and price setting behaviour grounded.