Cheaper, Post-Jobs Data Richening Largely Unwound

ACGBs (YM -7.0 & XM -5.5) sit cheaper and are situated in the middle of the Sydney session range. This follows a reversal of the post-employment data richening. Currently, futures are trading 1bp higher compared to pre-data levels.

• December new jobs came in well below expectations at -65.1k after an upwardly revised 72.6k but the unemployment rate was stable at 3.9%.
• The unwinding of post-data strength most likely reflected the understanding that a single month's data doesn't establish a definitive trend. The ABS has highlighted a shift in the timing of employment growth. Consequently, when observing trends over several months, the labour market is still characterised as tight, albeit gradually showing signs of easing.
• Apart from employment data, local participants have likely eyed the 1-3bps richening in US tsys in today’s Asia-Pac session.
• Cash ACGBs are 5-6bps cheaper on the day, with the AU-US 10-year yield differential 2bps wider at +18bps.
• Swap rates are 5bps higher on the day, with EFPs slightly tighter.
• The bills strip has maintained its bear-steepening, with pricing -1 to -8.
• RBA-dated OIS pricing is 1-5bps firmer for meetings beyond March. A cumulative 37bps of easing is priced by year-end.
• Tomorrow, the local calendar is empty.