Surveys Reiterate Consumer Woes & Tight Labour Market, ACGBs Bid

The defensive tone observed in wider markets (spill over from Monday trade & continued worry re: China COVID matters) coupled with soft domestic business and consumer survey prints (with the picture painted by consumers still far more dire than that given by businesses, at least in headline terms) has supported the ACGB space during Tuesday trade, leaving YM and XM 11.5 and 10.5 ticks above their respective settlement levels, a touch shy of best levels of the session. Cash ACGBs see the major benchmarks running 8.5-11.5bp richer across the curve, with 5s leading the bid. EFPs have actually broken the recent trend and sit a little narrower on the day, although the velocity and scale of the recent widening is notable. Bills run 5-19bp richer through the reds, bull flattening. Note that broader volume remains on the lighter side.

• Outside of the headline readings, we note that the NAB business survey revealed that “the supply side remains a challenge, with survey measures of both input and labour costs growth reaching new records in June at 3.6% and 4.8% respectively in quarterly terms.” This will have caught the RBA’s attention given its focus on softer survey and liaison programme findings when it comes to wage growth.
• A$800mn of ACGB Nov-32 supply headlines local matters tomorrow.
• In the semi space, SAFA’s May ’36 tap is set to price today after being launched earlier.