AUSSIE BONDS: Twist-Steeper After Jobs Data, Focus On US PPI & Claims Data

ACGBs (YM flat & XM -3.0) are holding a bear-steepening after today’s employment report for October. 

• It is not surprising that after five consecutive months of more than 30k new jobs, there would be payback at some point, especially in a month that includes school holidays. Employment in October printed below expectations at +15.9k with September revised down to 61.3k but the unemployment rate was steady at 4.1%. A tight labour market is consistent with the RBA on hold.
• MI consumer inflation expectations are heading in the right direction with the November reading moderating 0.2pp to 3.8%, the lowest since the pandemic-impacted February 2021.
• Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s twist-steepening. The US calendar sees PPI and jobless claims data later today.
• Cash ACGBs are 1bp lower to 3bps cheaper with the AU-US 10-year yield differential at +22bps.
• Swap rates are flat to 3bps lower, with the 3s10s curve steeper.
• The bills strip is mostly richer, with pricing -1 to +2.
• RBA-dated OIS pricing is 1-3bps softer across 2025 meeting. A 25bps rate cut is not fully priced until August.
• Tomorrow, the local calendar is empty apart from the AOFM’s planned sale of A$700mn of the 4.75% 21 April 2027 bond.