Cheaper, Slightly Stronger After WPI, Jobs Data Tomorrow

ACGBs sit cheaper (YM -4.0 & XM -1.5) but 1-3bp stronger after the data drop despite the Q1 Wage price Index printing close to analyst expectations. While the annual rate of 3.7% is at the highest level in over 10 years, it is still consistent with the inflation target. Worryingly for the RBA, however, the share of jobs receiving wage rises of between 4-6% rose to the highest level since 2009, according to the ABS.

• The latest round of ACGB Jun-35 supply saw smooth digestion with an increased cover ratio (3.6643x versus 2.2687x at the April 5 auction.
• Cash ACGBs are 1-3bp cheaper with the AU-US 10-year yield differential -4bp at -10bp.
• Swap rates are 1-3bp higher with the 3s10s curve flatter and EFPs unchanged.
• Bills are cheaper with pricing -1 to -4 but off worst levels.
• RBA dated OIS softens 2-3bp after the data but remains flat to 5bp firmer on the day across meetings with Apr’24 leading.
• The local calendar is slated to release the April Employment Report tomorrow with elevated job vacancies and strong immigration levels likely to deliver a robust employment outcome.
• Until then, the global calendar releases Euro Area CPI (Apr) and US Housing Starts (Apr) and Building Permits (Apr).