AUSSIE BONDS: Richer & Near Highs, RBA Bullock Speech Tomorrow

ACGBs (YM +6.0 & XM +6.5) are holding stronger and near session highs.

• Q2 GDP was close to expectations rising 0.2% q/q to be up 1% y/y, the slowest since the Covid-impacted Q3 2020 and excluding that period Q4 1991. As expected, growth was driven by public demand and net exports, while private consumption, inventories and private capex were all drags. The headline result was in line with the RBA’s August forecast. Accordingly, it shouldn't impact the current ‘on hold’ stance.
• Cash US tsys are slightly richer in today’s Asia-Pacific session after yesterday’s solid risk-off-induced gains. The major focus in the US this week is Nonfarm Payrolls on Friday. Later today we will get Trade Balance, MBA Mortgage Applications & JOLTS job openings, while the Bank Of Canada rate decision will also be watched.
• Cash ACGBs are 5-6bps richer, with the AU-US 10-year yield differential at +11bps.
• Swap rates are 6-8bps lower, with the 3s10s curve flatter.
• The bills strip has bull-flattened, with pricing flat to +7.
• RBA-dated OIS pricing is 1-9bps softer across meetings. A cumulative 19bps of easing is priced by year-end.
• Tomorrow, the local calendar will see Trade Balance data and a speech from RBA Governor Bullock at the Anika Foundation Lunch.