Australian bonds plunge despite disappointment in September retail sales; RBA’s decision eyed

The Australian government bonds plunged during Asian session of the first trading day of the week Monday even as investors remained disappointed on lower-than-expected rise in the country’s retail sales for the month of September, while still eyeing the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be revealed on November 5 by 03:30GMT for further direction in the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 6-1/2 basis points to 1.170 percent, the yield on the long-term 30-year bond surged nearly 6 basis points to 1.744 percent and the yield on short-term 2-year gained nearly 2-1/2 basis points to 0.857 percent by 04:25GMT.

Australia’s retail sales grew 0.2 percent m/m in September, well below expectations. This brought quarterly sales growth to 0.5 percent in nominal terms. This is the lowest result since March 2018 and well below the one-year, three-year and long-term average rates of growth, ANZ Research reported.

Last week’s inflation print gives the RBA some flexibility around the timing of the next rate cut; and a move next week is materially less than a 50 percent likelihood, ANZ reported in a separate report last week.

Meanwhile, the S&P/ASX 200 index slipped -0.14 percent to 6,652.00 by 04:30GMT.