Free Trial

Holding Sharply Cheaper After Employment Data Beat


ACGBs (YM -12.0 & XM -9.5) are holding weaker after an upside surprise in the June employment report.

  • June employment came in stronger than expected but below the upper end of forecasts. The economy added 32.6k new jobs after an upwardly revised 76.5k in May. The unemployment rate was steady at 3.5% after May was revised down from 3.6%. Full-time jobs and hours worked rose.
  • As the labour market remains very tight, Q2 inflation due July 26 will likely need to be down significantly including services for another RBA pause in August.
  • Cash ACGBs are 4-7bp cheaper after the data with the 3/10 curve 3bp flatter. The AU-US 10-year yield differential +6bp on the day at +20bp.
  • Swap rates are 9-12bp higher on the day, 4-7bp higher after the data.
  • The bills strip bear steepens with pricing -8 to -13.
  • RBA dated OIS pricing shifts 4-9bp firmer across meetings after the data. A 56% chance of a 25bp hike is now priced for August versus 40% before the data.
  • Tomorrow the local calendar sees no data releases.
  • In Europe today German PPI provide the highlight. Further out we have Initial Jobless Claims, Home Sales and Philadelphia Fed Business Outlook. We also have the latest 10-Year TIPS supply.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.