Cheaper, Dec-34 Auction Weighs, Employment Report Tomorrow

ACGBs (YM -6.0 & XM -5.5) are cheaper and just above Sydney session lows. Given the absence of significant domestic data on today's calendar, local participants appear to have been guided by US tsys in the Asia-Pac session today. Cash US tsys are dealing little changed in today’s Asia-Pac session after early weakness. Weaker than expected China GDP data, along with a softening in equity markets, may be at least partially responsible for this unwind.

• Cash ACGBs are 5-6bps cheaper, with the AU-US 10-year yield differential unchanged at +15bps. A giveback of early session outperformance versus US tsys may be attributable to a relatively poor showing at today’s Dec-34 ACGB auction.
• Swap rates are 4bps higher, with EFPs tighter.
• The bills strip is cheaper, with pricing -1 to -5.
• RBA-dated OIS pricing is 3-5bps firmer for meetings beyond May. A cumulative 44bps of easing is priced by year-end.
• Tomorrow, the local calendar sees Consumer Inflation Expectations for January along with the Employment Report for December. The data is likely to be watched closely given its strength over the previous two months. Bloomberg consensus expects job gains of 15k after a stronger-than-forecast 61.5k in November and for the unemployment rate to be stable at 3.9%.