CHINA PRESS: China To Expand Demand By Boosting Social Welfare

ACGBs (YM -1.0 & XM +1.0) are slightly mixed ahead of the RBA Policy Decision.

• Building approvals fell 6.0% m/m (estimate +2.6%) in August versus revised -10.0% in July.
• Private-sector home approvals fell 2.6% m/m versus revised +1.3% in July.
• Cash US tsys are slightly cheaper, with a steepening bias, in today's Asia-Pac session after yesterday's bull-flattener.
• MNI SECURITY: Trump Admin Will Proceed w/AUKUS Following Pentagon Review - Nikkei. Nikkei Asia reporting, "The Trump administration will proceed with the AUKUS defence pact linking the U.S., U.K. and Australia, maintaining the original timeline that includes the sale of three Virginia-class submarines to Canberra beginning in 2032..." The report comes after a Pentagon review in June, ordered by US Undersecretary of Defence Elbridge Colby, threw doubt over US participation in the nuclear submarine alliance.
• Cash ACGBs are 1bp cheaper to 1bp richer with the AU-US 10-year yield differential at +17bps.
• The bills strip is -1 to -3 across contracts.
• RBA-dated OIS pricing gives a 25bp rate cut today a 3% probability, with a cumulative 17bps of easing by year-end. 

China’s capital market will continue with its stable and positive development supported by good economic momentum, coordinated policy efforts, and inflows of medium- and long-term funds, said Securities Daily in a commentary. The stock market valuation is returning to a reasonable range at an accelerated pace, which has improved the safety margin of the market and led to insurance and mutual funds increasing their allocation, which will help smooth short-term market fluctuations and guide more rational investment behaviour, the newspaper said.

• China's RatingDog China PMI Mfg for September was +51.2, up from +50.5 in August and the highest since March.  
• Having contracted in May and July on trade war related volatility, today's strong release will be pleasing as some signs of the first half strength may not be sustained.  
• Output was up to 52 from 50.5 in August and New orders were stronger than the month prior and the highest print since February.  
• RatingDog China PMI Services for September was 52.9 from 53.0 in August.
• Employment declined to +48.4 from 48.7 for the lowest since April.  
• Prices charged rose relative to the last month.