Cheaper Despite Weaker Than Expected Q2 Capex, Retail Sales & Private Credit Tomorrow

ACGBs (YM -1.0 & XM -3.0) are holding slightly cheaper after dealing in narrow ranges in today’s Sydney session. This comes despite weaker-than-expected 2Q Capex data.

• Q2 national account components have so far printed weaker than expected with capex today down 2.2% q/q, yesterday’s construction work up only 0.1% q/q and real retail sales contracting 0.3% q/q. the investment series saw upward revisions to Q1 though. They are painting a weak growth picture for Q2. GDP prints on September 4 with inventories on September 2 and net exports/government spending on September 3.
• Cash US tsys are little changed in today’s Asia-Pac session. Nvidia’s results and Fed Bostick’s remarks aftermarket have had little impact.
• Cash ACGBs are 1-2bps cheaper, with the AU-US 10-year yield differential at +12bps
• Swap rates are 1-2bps higher.
• The bills strip is -2 to flat.
• RBA-dated OIS pricing is little changed today, with a cumulative 18bps of easing priced by year-end. Nevertheless, for meetings beyond November, pricing remains 7-12 bps firmer than pre-CPI levels yesterday.
• Tomorrow, the local calendar will see Retail Sales and Private Sector Credit data alongside AOFM’s planned sale of A$700mn of the 2.75% 21 November 2029 bond.