Richer But Off Best Levels Despite Q3 GDP Miss

ACGBs (YM +8.0 & XM +11.0) sit richer but 3bps cheaper than pre-GDP data levels. This came even though Q3 GDP surprised on the downside in terms of headline growth and its composition.

• Q3 GDP came in lower-than-expected at 0.2% q/q but the annual rate was higher at 2.1% y/y, in line with Q2. The composition of growth was soft given it was driven by government spending/investment and inventories. Non-dwelling construction was a bright spot though in the private sector.
• The move away from the best levels was assisted by the 1-3bps cheapening in cash US tsys in today’s Asia-Pac session. After the strong rally overnight, local participants may have used it as an opportunity to square long positions ahead of Friday’s NFP data.
• Cash ACGBs are 8-11bps richer on the day, 3-4bps cheaper in post-data dealings, with the AU-US 10-year yield differential 7bps tighter at +12bps. The differential was +19bps before the RBA decision yesterday.
• Swap rates are 6-9bps lower on the day, with EFPs little changed.
• The bills strip is holdings its bull-flattening, with pricing flat to +9.
• RBA-dated OIS pricing is 3-10bps softer on the day across meetings. This brings the post-RBA softening across meetings to 6-17bps.
• Tomorrow, the local calendar sees Trade Balance data for October.