Holding Cheaper After Jobs Beat, Nov-27 Supply Tomorrow

ACGBs (YM -4.0 & XM -2.0) are holding 3-5bps cheaper than pre-Employment data levels.

• Australia's June employment increased by 50,176 month-over-month, exceeding the estimated 20,000. The June jobless rate remained steady at 4.1%, matching expectations. Full-time employment rose by 43,327, while part-time employment increased by 6,849. The participation rate in June was 66.9%, slightly above the estimated 66.8%.
• Given the stage in the cycle and restrictive monetary policy, this is a strong result. In addition, hours worked rose in Q2 driving underemployment down and the participation rate is close to highs. Strong Q2 increases the risk of an August hike if Q2 CPI prints at 1% or above.
• The cash ACGB curve has twist-flattened, with yields 2bp higher to 1bp lower. The AU-US 10-year yield differential is +7bps.
• Swap rates are flat to 3bps lower, with the 3s10s curve flatter and EFPs wider.
• The bills strip has bear-flattened, with pricing flat to -3.
• RBA-dated OIS is sitting flat to 3bps firmer across meetings. Terminal rate expectations have jumped to 4.43% from 4.39% before the data. For reference, the expected terminal rate saw a peak of 4.52% in late June.
• The local calendar is empty tomorrow.
• Tomorrow, the AOFM plans to sell A$700mn of the 2.75% Nov-27 bond.