Firmer After Surprise Fall In Headline Employment

ACGBS firm in lieu of softer than expected labour market data, which saw a surprise fall in the headline employment print (only 2 of the 25 analysts surveyed by BBG ahead of the release looked for a decrease in headline employment), although that was a product of a reduction in part-time employment.

• The unemployment rate nudged 0.1ppt higher even as the participation rate unexpectedly fell by 0.2ppt. Underutilisation and underemployment both ticked away from their respective cycle bases, but are very supressed in a historical sense.
• Hours worked fell by 0.5% for a second consecutive month with the ABS noting that “we saw the number of people working reduced hours due to illness increasing by 86,000 to 606,000, which is over 50% higher than we would usually see at this time of the year.”
• This release doesn’t meaningfully alter the extremely tight picture projected by the labour market, so shouldn’t impact RBA policy moves in isolation.
• YM is +16.0 while XM is +18.0, with both contracts through their overnight high. Cash ACGBs run 16.0-17.5bp richer, with the 10- to 12-Year zone still leading. EFPs remain wider on the day, but are off session extremes. Bills run 7-19bp richer through the reds, also surging post-data. RBA dated OIS comes in a little more, with ~16bp of tightening now priced for next month, alongside a terminal cash rate of just under 3.60%.