Off Lows After Local Event Risk

The space softened in the wake of the release of a firmer than expected domestic labour market report, although corrected from worst levels ahead of the close. YM finished -2.0, with XM -2.5, while swaps tightened marginally vs. ACGBs across most of the curve.

• To sum things up, November's labour market report was much stronger than expected, with jobs growth in Victoria accounting for 74K of the 90K jobs added nationally, while underemployment and underutilisation continue to move away from their respective '20 peaks. The much stronger than expected headline jobs growth was largely driven by full time employment gains (84.2K) and more than offset the uptick in the participation rate (which has recovered to all-time highs of 66.1%), providing an unexpected dip in the headline unemployment figure. Still, there is a little way to go. The ABS has noted that "while the participation rate has recovered, there are still 138,000 fewer employed people than in March and 226,000 more unemployed people." The ABS also noted that "since the low point in May, total hours worked has increased by 159.8 million hours, recovering 86% of the 185.6 million hour decrease between March and May."
• The MYEFO provided a narrower deficit path vs. the budget that was only issued 2 months ago, although deficit projections remain at historically extreme levels, at least by Australian standards.
• Elsewhere, the Treasurer revealed the latest appointees to the RBA board, both of which were women who currently operate in the corporate sphere.
• It is also worth flagging that a handful of COVID cases in Sydney are garnering attention.