Cheaper, Employment Data Mixed, Curve Bear Steepens

ACGBs (YM -6.0 & XM -12.0) sit with a bear-steepening of the futures curve. Pricing is slightly weaker after the employment data for September showed mixed results. Employment growth printed lower than expected, while the unemployment rate was better than expected. In trend terms, average new jobs in Q3 were lower than Q2. The trend of slower full-time employment growth and higher part-time continued. Overall, the labour market remains tight but it is showing signs of easing.

• NAB quarterly business confidence next 3-mths printed -1 in Q3 from -4 in Q2, while business conditions next 3-mths showed 16 versus +17 in Q2.
• Local participants have also likely monitored ongoing weakness in US tsys, which has extended into today’s Asia-Pac session. Cash US tsys are 2 to 4bps cheaper.
• Cash ACGBs are 6-12bps cheaper, with the 3/10 curve steeper and the AU-US 10-year yield differential is 1bp lower at -19bps.
• Swap rates are 5-11bps higher, with EFPs tighter.
• The bills strip shows a bear-steepening, with pricing flat to -4.
• RBA-dated OIS pricing is little changed across meetings. A 43% chance of a 25bp hike at the November meeting is priced.
• Tomorrow, the local calendar is empty, with the next release being Judo Bank PMIs on Tuesday.