Daily Flows & Insights – Retail Sales Weaker Than Expected & The Week Ahead

Daily Flows

  • Last Friday, TD activity favoured longer terms, as market participants are looking to lock in high yields while we near the end of the rate hike cycle.
  • An offering of 5.50% for 3 years saw significant flow.
  • NCD margins were steady. Expect this to change today as banks look to sure up their funding position for the end of the month.

Retail Sales Weaker Than Expected

  • Retail sales came in weaker than expected last Friday. For the month of June retail sales dropped by 0.8% with the markets forecasting a flat reading.
  • This marks the second drop of retail trade for the calendar year.
  • Cost of living pressure continues to affect consumer spending, with department stores, clothing and footwear driving the decline.
  • This print follows the trend of recent private banking data reflecting a decline in consumer spending.
  • As the RBA is looking to decide monetary policy as data comes in, it will be interesting to see how much of an impact this will have on tomorrow decision..

The Week Ahead

  • Tomorrow’s decision on monetary policy will be the main event for the week.
  • With back to back soft prints (CPI & Retail Sales), futures trading on the cash rate has contracted considerably.
  • However, 14 out of 25 economists are predicting a hike tomorrow.
  • In the U.S monthly ISM manufacturing and services are released.
  • ISM Services PMI jumped unexpectedly in June 2023, markets will be looking to confirm whether this will be a continuing trend.
  • Employment data is also released at the end of the week, with unemployment rate and non farm payrolls.
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Curve Team
Jack Pedersen