A Touch Softer Post-Data After Pre-Data Uptick, Not A Gamechanger For RBA

A beat for the headline employment print in October has applied light pressure to the Aussie bond space, with a move lower in the unemployment rate accompanying the headline beat. Note that the headline beat was driven solely by full-time employment gains, with the part-time employment change in negative territory.

• The labour market continues to perform strongly, while wage growth has accelerated in recent times. Still, we doubt that this week’s labour market and wage data will trigger a move back to 50bp hikes for the RBA, given the proximity to the recent downshift to 25bp steps and the Bank’s clear focus on the lagged impact of the already deployed tightening, as well as the risks (both domestic & global) that are swirling around the Australian economy.
• This thought process seems consistent with the broader train of thought within the market, with only a limited downtick observed post data, leaving YM +7.0 & XM +11.0 i.e. back in inline with early Sydney levels and off post-data lows.
• Meanwhile, Bills run 1-12bp richer through the reds, trading in a similar fashion, with RBA dated OIS pricing 21-22bp of tightening for next month’s RBA meeting.