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Richer But Little Changed  After Q3 GDP Miss


ACGBs (YM +9.0 & XM +13.0) holding their post-RBA decision rally after Q3 GDP prints on the weak side of expectations. Q3 GDP showed +0.2% q/q versus +0.5% consensus. In terms of key takeaways from the data:

  • “Government spending and capital investment were the main drivers of GDP growth this quarter.”
  • "Increased inventories reflected falling exports".
  • “Household spending was flat in the September quarter, as government benefits and rebates reduced household spending on essential services such as electricity”.
  • Cash ACGBs are 11-14bps richer on the day, little changed in post-data dealings, with the AU-US 10-year yield differential 9bps tighter at +9bps. The differential was +19bps before the RBA decision yesterday.
  • Swap rates are 8-10bps lower on the day, with EFPs little changed.
  • The bills strip is holdings its bull-flattening, with pricing -1 to +13.
  • RBA-dated OIS pricing is slightly firmer across meetings in post-data dealings but 3-12bps softer on the day. This brings the post-RBA softening across meetings to 7-18bps. The expected terminal rate drops to 4.36% from 4.42% yesterday.

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