Underpinned By Softer Than Expected GDP Data

Slightly softer than expected GDP data allowed the space to firm after what appeared to be payside swap flow-inspired cheapening in futures at the re-open, after an overnight bid linked to the richening in U.S. Tsys.

• While the RBA’s clear focus is on returning inflation to the target band, it has noted that the policy settings required to do so puts it on a narrow path re: keeping the economy on an even-keel. Today’s release wasn’t anywhere near worrying levels re: GDP growth, but the Bank will watch the evolution of economy (with a particular focus on household spending, which rose 1.1% Q/Q in Q3) as the lagged impact of tighter monetary policy takes hold in the coming months.
• YM finished +2.0, with XM +4.0 at the bell, after a tick away from best levels inspired by hope surrounding a further reduction in Chinese COVID restrictions (which was delivered around the Sydney close). Cash ACGBs were flat to 4bp richer across the curve, with the 10- to 12-Year zone outperforming.
• Bills were flat to -1, with little meaningful movement in RBA dated OIS pricing on the session.
• Looking ahead, trade balance data headlines Thursday’s local docket.