Free Trial

Cheaper After Jobs Gain Easily Beats Expectations

AUSSIE BONDS

ACGBs (YM -1.0 & XM +1.5) have pared early gains after the July employment gain easily beats market expectations.

  • In July, Australia saw a significant increase in employment with a rise of 58,238 jobs, surpassing the estimated 20,000. Full-time employment grew by 60,527, while part-time jobs fell by 2,289. The participation rate was 67.1%, higher than the forecasted 66.9%.
  • However, the jobless rate was 4.2%, slightly above the expected 4.1%.
  • (ABS) "The employment and participation measures remain historically high while unemployment and underemployment measures remain historically low, compared with what we saw before the pandemic. This suggests the labour market remains quite tight.”
  • “Although the unemployment rate increased by 0.1 percentage point in each of the past two months, the record high participation rate and near record high employment-to-population ratio shows that there continues to be a high number of people in jobs, and looking for and finding jobs."
  • Cash ACGBs are 4-5bps cheaper after the data, with the AU-US 10-year yield differential at +6bps. Cash US tsys are slightly cheaper in today’s Asia-Pac session.
  • Swap rates are 4-6bps higher after the data but flat to 1bp lower on the day.
  • The bills strip continues to hold a twist-flattening, with pricing -3 to +1.
  • RBA-dated OIS pricing is 4-8bps firmer across meetings beyond September after today’s Employment Report for July. A cumulative 23bps of easing is priced by year-end.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.