Richer, Mid-Range, PMIs Portray A Weak Economy

ACGBs (YM +2.0 & XM +4.0) are slightly richer, dealing in the middle of the Sydney session’s relatively narrow range.

• The preliminary Judo Bank PMIs for August showed that private sector output continued to contract in August, especially in the important services sector. The indices are portraying a weak economy consistent with the RBA on hold. The composite index deteriorated to 47.1 from 48.2 in July, the lowest since January 2022, as new orders shrank.
• US tsys are holding onto early gains in the Asia-Pac session. Little meaningful macro news flow has crossed. US tsys sit 1-2bps richer across the major benchmarks.
• Cash ACGBs are 2-4bp richer, with the AU-US 10-year yield differential 2bp tighter at -8bp.
• Swap rates are flat to 3bp lower, with the 3s10s curve flatter.
• The bills strip has twist flattened, with pricing -1 to +2.
• RBA-dated OIS is mixed with pricing 1bp firmer (Mar' & May'24) to 2bp softer (Aug' & Sep’24) across meetings.
• (AFR) The RBA says a central bank digital currency could increase “efficiency and resilience in some areas of the payments system”, but warns more research is required to deal with legal, regulatory, technical and operational issues to ensure any eAUD operates safely. (See link)