JGBS: 20YY Leads Yields Lower

Below is a selection of key recent onshore media highlights for China ICYMI :

AI Adoption (Yicai): As Chinese Firms Crank Up AI Adoption ROI Remains Elusive, Accenture Report Says

AI Adoption (Yicai): AI Is Rewriting the Rules of Economic Growth, Jobs and Wealth Creation

AI Adoption (Xinhua): China's policy-industry synergy powers AI for inclusive growth

Share Buybacks (Xinhua): SOEs announce share purchase plans amid confidence in China's capital market

AI Adoption (China Sec Journal): Building a Fair and Just Global Artificial Intelligence Governance System

Property (China Sec Journal): Simultaneous recovery in both sales volume and prices signals a stabilization in the Beijing and Shenzhen property markets

Growth (Shanghai Sec Journal): Shanghai's GDP grew by 5.6% year-on-year in the first half of 2026.

Population (SCMP): China’s state agencies are hiring retirees as the workforce rapidly ages

IPO (Straits Times): China’s Moonshot plans IPO in 6 months after AI breakthrough

The focus this week will be on June jobs data published on Thursday. It will round out Q2 and given the data is volatile, the quarterly average will be important in gauging labour market trends. The RBA looks deeper than headline unemployment and employment numbers and so hours worked, youth unemployment and underemployment will also be important indicators.

• Bloomberg consensus is forecasting a 15k rise in June jobs after May’s 40.3k, which would result in Q2 job creation below Q1. The unemployment rate is expected to hold steady at 4.4%.
• Westpac’s leading index for June is released Tuesday. The 6-month annualised rate has been signalling growth slowing to slightly below trend in H2 and into 2027 but not a major slump.
• Preliminary July S&P Global PMIs print Friday. The June composite was marginally in growth territory with manufacturing outperforming services, which is likely being pressured by higher inflation and 75bp of monetary tightening this year. Signs of a negative impact from the resumption of US-Iran hostilities in early July will be looked for.
• The RBA Bulletin is published on Tuesday and includes “Listening to Australians: A New RBA Survey of the Public’, which may include some interesting observations. 

NZGBs are 4–5bps cheaper today, with the NZ–US 10-year yield differential widening to +15bps, its highest level since late May, after reaching as low as -10bps earlier this month.

• The 10-year differential had narrowed from around +50bps in late March, when NZ's long-term issuer default rating outlook was revised to negative from stable.
• At around +50bps, the differential was near the top of its two-year trading range.
• Since then, the NZ–US 1Y3M swap spread narrowed by around 100bps, with the 10-year yield differential compressing broadly in line.
• More recently, however, the NZ–US 1Y3M swap spread has widened by around 50bps during July, reflecting lower US rates following softer inflation data and higher NZ rates ahead of tomorrow's Q2 CPI release.
• A simple regression of the 10-year yield differential against the NZ–US 1Y3M swap spread over the past three years suggests the current differential is around 3bps below its regression-implied fair value. 

Figure 1: NZ-US 10-Year Yield Differential

 Source: Bloomberg Finance LP / MNI