A Typical Subdued Pre-NFP Friday Session, JGBs Pressured

ACGBs (YM +2.0 & XM +3.0) are slightly richer after dealing in relatively narrow ranges in a typical pre-NFP Friday session. With the local calendar light, the local market has oscillated with offshore developments in today’s Sydney session.

• After a moderately negative lead in from NY trading for US tsys, weakness extended after JGBs bear-steepened, with yields 1-9bps higher at one stage. This shift was triggered by higher-than-expected labour and real cash earnings data. The current movement extends the sell-off initiated by yesterday's disappointing 30-year auction result. Nevertheless, this weakness has been somewhat tempered during the Tokyo afternoon session.
• US tsys are dealing 1-2bps cheaper in today’s Asia-Pac session.
• Higher interest rates and inflation in Australia mean an increasing number of mortgage holders are facing severe financial stress, though most households remain resilient, according to Andrea Brischetto, the RBA’s head of financial stability, in a speech today. (See Bloomberg link)
• Cash ACGBs are 2-4bps richer, with the AU-US 10-year yield differential 1bp tighter at +14bps.
• Swap rates are 3-4bps lower, with EFPs little changed.
• The bills strip has bull-flattened, with pricing +1 to +2.
• RBA-dated OIS pricing is dealing little changed across meetings.
• Tomorrow, the local calendar sees Westpac Consumer Confidence, along with a speech by Michele Bullock, RBA Governor, at the AusPayNet Summit in Sydney.