AUSSIE BONDS: Weak GDP Sparks A Sharp Rally, US ADP Jobs Later Today

ACGBs (YM +8.0 & XM +5.0) sharply richer after reversing early weakness following weaker-than-expected Q3 GDP. 

• The Australian economy grew at 0.3% in Q3, 20bps lower than expected, and 0.8% y/y. Growth was propped up by public sector expenditure, up 1.4%, with government consumption and public investment both contributing to the Q3 result. The RBA forecasts year-ended GDP to print at 1.5% in Q4.
• GDP per hour worked, a measure of productivity which the RBA watches closely, fell 0.5% q/q, from Q2’s 0.8% decline, and was -0.8% y/y. Real unit labour costs, meanwhile, rose 0.5% q/q, down from Q2’s 1.5%.
• Cash US tsys are 2bps richer to 1bp cheaper, with a steepening bias, in today’s Asia-Pac session. The focus now turns to ADP private employment and ISM data later today while Fed Chairman Powell speaks at a moderated policy discussion at 1340ET. US Non-Farm Payrolls are due on Friday.
• Cash ACGBs are 5-9bps richer with the AU-US 10-year yield differential at +3bps.
• Swap rates are 4-9bps lower.
• The bills strip has cheapened, with pricing flat to -1.
• RBA-dated OIS pricing is 5-13bps softer across 2025 meetings. Nevertheless, a 25bps rate cut is still not fully priced until May.
• Tomorrow, the local calendar will see Household Spending and Trade Balance data.