Richer, RBA Bullock Neutral, Q1 GDP Miss, Productivity Stalled

ACGBs (YM +4.0 & XM +7.5) are richer but have retreated from the Sydney session's best levels. Following a positive lead from US tsys, the domestic market focused on two key events today.

• RBA Governor Bullock remained neutral in her Senate testimony and reiterated the Board’s stance of not “ruling anything in or out” and that policy is “restrictive”.
• Q1 GDP rose 0.1% q/q, the slowest quarterly rate since Q3 2022. Economic growth slowed to 1.1% y/y from 1.6%, the lowest since Q4 2020 and excluding Covid Q1 1992. Imports and investment were a drag on the economy while government and private consumption plus inventories made solid contributions. The RBA was expecting a weak outturn and so this data is unlikely to change its current on-hold stance.
• After two straight quarters of growth, productivity improvements stalled in Q1. GDP per hour worked was flat on the quarter and compared to a year ago but that was up on Q4’s -0.4% y/y.
• Cash ACGBs are 5-7bps richer, with the AU-US 10-year yield differential at -10bps.
• Swap rates are 5-6bps lower, with the 3s10s curve flatter.
• The bills strip has bull-flattened, with pricing flat to +6.
• RBA-dated OIS pricing is 3-5bps softer for meetings beyond September.
• Tomorrow, the local calendar will see Home Loans Value and Trade Balance data.