Richer, US Tsys Consolidate After GDP Miss, Capex Due

ACGBs (YM +4.0 & XM +3.5) are stronger after US tsys finished ~1bp richer across the major benchmarks. US tsys consolidated Tuesday's post-JOLTs gains yesterday, firming after a weaker-than-forecast second read of US GDP. ADP also missed (177k versus 195k expected) albeit with an upward revision.

• The focus now turns to the release of the July PCE deflator, MNI Chicago PMI and weekly Jobless Claims data later today.
• Cash ACGBs opened 4-5bp richer, with the AU-US 10-year yield differential 1bp lower at -8bp.
• Swap rates are 3-4bp lower.
• The bills strip twist-flattens, with pricing -1 to +5.
• RBA-dated OIS pricing is flat to 5bp softer across meetings.
• (AFR) A surprisingly low consumer price index reading for July knocked the Australian bond yields lower as investors dialled back their expectations of further interest rate rises and sharpened the probability of rate cuts. (See link)
• Today the local calendar sees Q2 Capex and the third estimate of 2023-24 Capex plans. Tax incentives, which expired on 30 June 2023, should boost Q2 capex.
• Elsewhere, China PMI data is due, with expectations that the manufacturing index will remain in contraction for the fifth straight month at 49.2 versus 49.3 prior. The non-manufacturing PMI is expected to extend its decline to 51.2 from 51.5.