A Sigh Of Relief Re: GDP Allows Bonds To Extend Early Cheapening

Aussie bond futures moved to fresh session lows in the wake of the release of domestic data and the official Chinese PMI readings (which weren’t as soft as expected), after the wider impetus applied pressure pre-data.

• A quick look at the domestic Q1 data reveals a much narrower than exported current a/c surplus, alongside firmer than expected inventories data and company profits (Although the latter was solely driving by the mining industry). The monthly reference points revealed softer than expected building approvals readings, while private sector credit topped expectations.
• The latest round of partials data removed downside worry re: tomorrow’s Q1 GDP reading (some had touted the potential of a negative Q/Q reading in recent days), with notable sell-side expectation adjustments made. Firmer than expected inventory and public spending prints drove upward revisions, with a range of 0.6-1.1% when it comes to Q/Q GDP growth estimates provided by the major sell-side names that we have seen updated revisions for (BBG consensus now stands at +0.7%).
• YM -10.5 & XM -11.0 at typing as a result, just off worst levels of the day. Super long cash ACGBs have cheapened by ~13bp. The IR strip runs 1-16bp cheaper on the session, while EFPS are comfortably wider on the day, with the 3-/10-Year box bull flattening.
• Outside of Q1 GDP data, tomorrow’s domestic docket will being final manufacturing PMI data from S&P Global, the latest CoreLogic house price reading and A$1.0bn of ACGB Apr-25 supply.