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AUSSIE BONDS: Richer, Narrow Ranges, Wages & Jobs Data Next Week

AUSSIE BONDS
RegionGlobalBulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM +6.0 & XM +8.5) are stronger after dealing in relatively narrow ranges in today’s data-light Sydney session.

  • (AFR) The total cost of public servant wages grew faster than it has in 15 years last financial year to $232 billion, fuelling economists’ warnings that government spending is helping to keep interest rates higher for longer. Employee expenses are one of the fastest growing areas of government spending, rising 8 per cent over the 2023-24 financial year. (see link)
  • Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s strong reversal off Wednesday's post-election cheaps.
  • Cash ACGBs are 6-8bps richer with the AU-US 10-year yield differential at +23bps.
  • Swap rates are 6-7bps lower, with the 3s10s curve flatter.
  • The bills strip has twist-flattened, with pricing -1 to +6.
  • RBA-dated OIS pricing shows no easing by year-end. A 25bps rate cut is not fully priced until July.
  • On Monday, the local calendar is empty, ahead of Consumer and Business Confidence on Tuesday.  The Q3 Wage Price Index is released on Wednesday followed by the Employment Report for October on Thursday.
  • Next week, the AOFM plans to sell A$800mn of the 2.50% 21 May 2030 bond on Wednesday and A$700mn of the 4.75% 21 April 2027 bond on Friday. 
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ACGBs (YM +6.0 & XM +8.5) are stronger after dealing in relatively narrow ranges in today’s data-light Sydney session.

  • (AFR) The total cost of public servant wages grew faster than it has in 15 years last financial year to $232 billion, fuelling economists’ warnings that government spending is helping to keep interest rates higher for longer. Employee expenses are one of the fastest growing areas of government spending, rising 8 per cent over the 2023-24 financial year. (see link)
  • Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s strong reversal off Wednesday's post-election cheaps.
  • Cash ACGBs are 6-8bps richer with the AU-US 10-year yield differential at +23bps.
  • Swap rates are 6-7bps lower, with the 3s10s curve flatter.
  • The bills strip has twist-flattened, with pricing -1 to +6.
  • RBA-dated OIS pricing shows no easing by year-end. A 25bps rate cut is not fully priced until July.
  • On Monday, the local calendar is empty, ahead of Consumer and Business Confidence on Tuesday.  The Q3 Wage Price Index is released on Wednesday followed by the Employment Report for October on Thursday.
  • Next week, the AOFM plans to sell A$800mn of the 2.50% 21 May 2030 bond on Wednesday and A$700mn of the 4.75% 21 April 2027 bond on Friday.