Fresh Pressure On Stellar Labour Market Report

Aussie bonds sold hard on the back of the latest round of Australian labour market data, with the stronger than expected +115.2K headline employment change (BBG median +30.0K) driven by a +97.5K full-time employment change. The participation rate ticked up to 66.2% from a revised 65.9%, but the strong headline job growth resulted in a fall in the unemployment rate, which printed at 5.1% (expectations were for a steady 5.5%). A reminder that the RBA has pencilled in an unemployment rate of 5.0% come the end of the calendar year, there are clear downside risks to that estimate. Underemployment fell to 7.4%, its lowest level since January 2014. Underutilisation fell to 12.5%, the lowest level witnessed since early 2013. YM now -10.5 on the day, with XM -11.0, just off initial reaction lows.