A Touch Softer After NAB Business Survey

Aussie bonds soften in the wake of the latest NAB business survey (with the front end leading the move), which saw the confidence reading push higher to 7 (prev. 2) and conditions move higher to 20 (from 14).

• When it came to the write up the survey collators noted “a marked rally in the face of headwinds from inflation and rising interest rates, as well as a deteriorating global economic outlook.” The rise in labour costs accelerated further in July, with NAB suggesting that “overall, the survey suggests that despite global and domestic economic headwinds, demand has remained strong - and inflationary pressure continues to build suggesting that inflation is yet to peak.” YM last deals +1.5 on the day, a touch above its reaction low, with the move in XM more muted, last dealing little changed vs. pre-release levels +3.5, testing its early Sydney lows. Cash ACGB trade sees the major benchmarks running 2-5bp richer on the day, with the broader bull flattening still intact. Bills run +1 to -3 through the reds.
• The OIS strip is pricing in ~43bp of tightening come the end of the RBA’s September decision, within the boundaries of the recently observed range.