Richer But Slightly Weaker After Broadly In Line Q2 GDP

ACGBs (YM +4.0 & XM +5.5) are holding stronger, but slightly weaker after the release of broadly in-line Q2 GDP data.

• GDP rose 0.2% q/q (estimate +0.2%) in Q2 versus a revised +0.2% in Q1. GDP rose 1.0% y/y (estimate +0.9%) versus a revised +1.3% in Q2. Estimates range was +0.6% to +1.2%.
• (ABS) “Excluding the COVID-19 pandemic period, annual financial year economic growth was the lowest since 1991-92 - the year that included the gradual recovery from the 1991 recession."
• “Spending on many discretionary categories fell in the June quarter. This followed a relatively strong result in the March quarter, which included a number of sporting, gambling and music events.”
• “The strongest detractor from growth was transport services, particularly reduced air travel."
• "The household saving ratio was unchanged at 0.6 per cent in the June quarter. Gross disposable income rose 0.9 per cent, outpacing a rise in nominal household spending of 0.7 per cent."
• Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s solid risk-off-induced gains.
• Cash ACGBs are 4-5bps richer, with the AU-US 10-year yield differential at +11bps.
• Swap rates are 5-7bps lower.
• The bills strip has twist-flattened, with pricing -1 to +6.
• RBA-dated OIS pricing is 1-7bps softer across meetings. A cumulative 18bps of easing is priced by year-end.