Daily Flows & Insights – Retail Sales Underwhelm as Spending Pressures Rise

Daily Flows

  • We saw large flows yesterday into non-major paper, with investors targeting CUA, SUN, and BOQ FRNs, amongst others, across the 1-3 year tenors.
  • A1/A banks were favoured by investors looking to place funds into term deposits, with 5.31% leading the way for 12 month deposits.
  • Curve is launching a new A1/A+ NCD program from a foreign branch bank looking to begin issuing NCDs for the first time, with an indicative margin of +40. Contact your Curve representative for more information.

Retail Sales Underwhelm as Spending Pressures Rise

  • Retail sales eked out an 0.1% gain in April on March levels, short of the 0.2% growth expected by economists.
  • Persistent services inflation continues to erode consumer purchasing power, with rising costs of education, healthcare, and insurance comprising an increase proportion of household spending.
  • On an annual basis, retail sales rose just 1.3% – a long way off the pace of early 2023 which saw growth touching 5%.
  • The ABS pointed to an early Easter and the timing of school holidays around the country as factors causing added volatility in the retail sales metric over the last two months.
  • Plummeting consumer confidence and expectations of continued spending pressures will give the RBA pause for thought ahead of their June meeting, with today’s monthly inflation print a significant data point that will be closely watched.
  • Overnight, Fed speaker Neel Kashkari was keeping the door ajar for future interest-rate increases, which should come as no surprise given their messaging to date but still sent yields higher in the US (10 year up 9bps) and in Australia, with most tenors up 7-8bps so far this morning.
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Curve Team
Josiah Binet