Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, explains that the Australian retail sales came as a relief after disappointing Q3 GDP, which was due to weak growth in consumer spending as they rose by +0.3%/m in Oct.
Key Quotes
“Clothing and footwear rose by +2.6%/m, one of the weak spots of Q3 consumption (-0.2%/q). Similarly, Household goods rose by +0.6%/m, after falling by -0.2%/q in Q3.”
“Retail sales accounts for only one-third of actual consumption, where other weak spots in the Q3 consumption report – utilities and spending associated with vehicles – are not included in retail sales reports.”
“Rising chatter of the RBA delivering a rate cut next year has smashed the OIS curve. Pre-GDP, a Nov 2019 hike was 40% priced, then 30% priced, and now is marginally priced for a cut.”
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