Little Changed, At Session Bests, RBA Gov. Lowe’s Final Speech Tomorrow

ACGBs (YM -1.0 & XM -1.0) sit at or near session highs, although the ranges have been narrow today.

• Q2 GDP printed in line with expectations at +0.4% q/q after an upwardly revised +0.4% in Q1. Due to revisions, Q2 grew at a faster-than-expected +2.1% y/y. This is above trend and well above the RBA’s forecast of +1.6% y/y. To achieve its year-end projection of +0.9%, H2 needs to average 0.1% q/q.
• Q2 saw another very weak productivity reading driven by a strong pick-up in hours worked, which rose 2.5% q/q. Productivity fell 2% q/q, the third straight quarterly drop, to be down 3.5% y/y after -4.6% y/y in Q1. As a result, unit labour costs remained elevated rising to 7.5% y/y, which is likely to continue concerning the RBA.
• Cash ACGBs are flat to 1bp cheaper, with the AU-US 10-year yield differential at -10bp.
• Swap rates are flat, with EFPs tighter.
• The bills strip is mixed, with pricing flat to +1.
• RBA-dated OIS pricing is flat to 3bp firmer for meetings beyond Mar'24.
• Tomorrow the local calendar sees the release of July trade balance data, along with a speech from outgoing RBA Governor Phil Lowe.