Underpinned By Broader Tone & Soft Headline Survey Readings

The generally defensive tone observed in wider markets, coupled with softer domestic business and consumer survey readings (with the picture painted by consumers still far more dire than that given by businesses, at least in headline terms) has seemingly supported the ACGB space during Tuesday trade, leaving YM and XM 11.5 ticks above their respective settlement levels. EFPs have actually broken the recent trend and sit a touch narrower on the day, although the velocity and scale of the recent widening is notable. Bills run 7-18bp richer through the reds. 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.