Cheapens Sharply After Large Employment Beat

ACGBs (YM -3.0 & XM -3.0) are 6-7bps cheaper after February’s Employment Reports prints way stronger than expectations: Total Employment change 116.5k (+40k est & +15.3k prior), Full-Time Employment change +78.2k (19.9k revised prior), Part-Time Employment change +38.3k (-4.6k revised prior) and the Unemployment Rate falls to 3.7% (4.0% est and 4.1% prior).

• (ABS) "The large increase in employment in February followed larger-than-usual numbers of people in December and January who had a job that they were waiting to start or to return to. This translated into a larger-than-usual flow of people into employment in February and even more so than February last year."
• “There was a large increase in hours worked in February, as people started or returned to work."
• Cash ACGBs are 2-3bps cheaper after being 3-4bps richer earlier in the Sydney session. The AU-US 10-year yield differential is 3bps higher at -20bps after being at -25bps earlier.
• Swap rates are 4-5bps higher.
• The bills strip is cheaper, with pricing -2 to -4.
• RBA-dated OIS pricing is 8bps firmer for meetings beyond December. A cumulative 39bps of easing is priced by year-end versus 42bps prior to the release.