Growth figures of domestic retail sales have been declining since 2014 and they reached a low-point in September 2017 when they registered an annual growth rate of just 1.5%. They then began increasing for about a year, only to stabilise at around 3.0% to 3.5% through late 2018 before trending lower through 2019. However, the latest figures are not in keeping with recent months.
According to the latest ABS figures, total retail sales jumped by 0.9% in November on a seasonally-adjusted basis, more than double the expected increase of +0.4% and well above October’s 0.1% increase after it was revised up from zero. On an annual basis, retail sales increased by 3.2%, as compared to October’s figure of 2.3%.
Westpac senior economist Matthew Hassan said, “Retail sales came in much stronger than expected in November on what looks to be a combination of ‘Black Friday’ sales and some delayed effect from policy stimulus measures.”
US Treasury yields had had a quiet night and bond yields in the domestic market moved in a similar vein. By the end of the day, 3-year, 10-year and 20-year ACGB yields had all inched up 1bp to 0.81%, 1.27% and 1.69% respectively.
Prices of cash futures contracts moved to soften expectations of a rate cut in the first half of 2020, although the change was minor. February contracts implied a 42% chance of a 25bps rate cut, down from the previous day’s 53% while March contracts implied a 55% chance of another cut, down from 69%. A full 25bps rate cut is now not completely factored in until June.