Little Changed After Domestic & China PMI Data Drop

ACGBs (YM +2.0 & XM +2.0) are little changed after the release of strong to in line AU capex and private sector credit data and mixed China PMIs. Q2 capex data rose more than expected, printing +2.8% q/q versus +1.0% expected. Australian firms plan to spend A$157.8bn in 2023-24 versus an estimate of A$151.5bn. Private sector credit printed in line with expectations at +0.3% m/m. However, China's PMI data was mixed. The manufacturing index was stronger than expected at 49.7 versus 49.2 expected and 49.3 prior, while non-manufacturing fell to 51.0 from 51.5 prior. 51.2 was expected.

• Cash ACGBs are 2-3bp richer, with the AU-US 10-year yield differential 1bp higher at -6bp.
• Swap rates are 2-3bp lower.
• The bills strip bear-flattens, with pricing flat to +4.
• RBA-dated OIS pricing is flat to 4bp softer across meetings.
• (AFR) Australia's inflation readings continued to cool rapidly for July and should be shifting the conversation in financial markets away from whether the peak in interest rates has been reached, to a far bigger discussion about the timing of coming interest-rate cuts. (See link)