MNI MARKETS ANALYSIS: Aussie Bills.....>

AUSSIE BONDS: MNI MARKETS ANALYSIS: Aussie Bills Weekly Update

- The space was well bid this week with the whites & reds up 9-13 ticks over the

last 5 days on the back of soft labour market data (the latest NAB Business

Survey provided a warning shot ahead of the release).

- Headline jobs growth was solely driven by part-time roles, but still topped

exp. The uptick in participation resulted in a higher unemp. rate. Unemployment

has gone from 4.9% to 5.2% in the last 2 months & may trigger easing based on

the RBA's assessment that "there was still spare capacity in the economy & that

a further improvement in the labour market was likely to be needed for inflation

to be consistent with the target... the Board will be paying close attention to

developments in the labour market at its upcoming meetings." Underemployment &

underutilisation were also on the rise. The print has got many, including Terry

McCrann, calling for a June cut from the RBA. Swaps have reflected this with OIS

pricing a ~70% chance of such a move at the June meeting.

- The space is looking through the federal election, with a focus on Tuesday's

release of the RBA's May meeting and an address from RBA Gov. Lowe.