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AUSSIE BONDS: Cheaper After Jobs Data But Off Worst Levels

AUSSIE BONDS
RegionGlobalBulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM -5.0 & XM -3.0) are 5-8bps lower after a strong Employment Report, though they have recovered slightly from the session's worst levels. 

  • RBA officials often speak of the labour market. Today’s September data plus what appears to be a turn in the trend since mid-year will likely confirm its view that the labour market is tighter than implied by full employment estimates and that firms are “labour hoarding”. The gradual deterioration in some of its metrics appears to have stalled or turned, thus policy is likely to “need to be sufficiently restrictive” for now.
  • Cash US tsys are 1-2bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s modest gains.
  • Cash ACGBs are 3-4bps cheaper, with the AU-US 10-year yield differential 3bps wider to +21bps.
  • Swap rates are 2-3bps higher, with the 3s10s curve flatter.
  • The bills strip is cheaper, with pricing -4 to -6., but well off worst levels.
  • RBA-dated OIS pricing is 7-10bps firmer for 2025 meetings after the data. A cumulative 5bps of easing is priced by year-end versus -8bps pre-data.
  • Tomorrow, the local calendar is empty apart from the AOFM’s planned sale of A$500mn of the 4.75% 21 April 2027 bond.  
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ACGBs (YM -5.0 & XM -3.0) are 5-8bps lower after a strong Employment Report, though they have recovered slightly from the session's worst levels. 

  • RBA officials often speak of the labour market. Today’s September data plus what appears to be a turn in the trend since mid-year will likely confirm its view that the labour market is tighter than implied by full employment estimates and that firms are “labour hoarding”. The gradual deterioration in some of its metrics appears to have stalled or turned, thus policy is likely to “need to be sufficiently restrictive” for now.
  • Cash US tsys are 1-2bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s modest gains.
  • Cash ACGBs are 3-4bps cheaper, with the AU-US 10-year yield differential 3bps wider to +21bps.
  • Swap rates are 2-3bps higher, with the 3s10s curve flatter.
  • The bills strip is cheaper, with pricing -4 to -6., but well off worst levels.
  • RBA-dated OIS pricing is 7-10bps firmer for 2025 meetings after the data. A cumulative 5bps of easing is priced by year-end versus -8bps pre-data.
  • Tomorrow, the local calendar is empty apart from the AOFM’s planned sale of A$500mn of the 4.75% 21 April 2027 bond.