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Post-Jobs Data Spike Richer Is Unwound

AUSSIE BONDS
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ACGBs sit mid-range (YM -6.0 & XM -4.0) after the post-employment spike higher was all but reversed in after trade. The April Employment Report undershot expectations with a print of -4.3k m/m versus expectations of +25k and delivered an unexpected lift in the unemployment rate to 3.7% (3.5% est.) from 3.5%.

  • A closer examination of the data, which revealed that the actual rise in the unemployment rate was only 1.2% before rounding and that March employment had been revised higher from 53k to 61.1k, saw the market quickly reverse course.
  • A move away from the session best level for US tsys and sharply higher NZGB yields post-budget likely aided the ACGB reversal.
  • Cash ACGBs are 1-2bp richer post-data but 4-6bp cheaper on the day with the AU-US 10-year yield differential +1bp at -9bp.
  • Swap rates are sitting mid-range with 6-8bp higher and EFPs 1-2bp wider.
  • The bills strip is steeper with pricing -1 to -13.
  • RBA dated OIS are 4-10bp firmer on the day for meetings beyond September.
  • The local calendar is light until Retail Sales on May 26.
  • With the US calendar relatively light today, US tsys are likely to be on headline watch, particularly about debt ceiling negotiations.
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ACGBs sit mid-range (YM -6.0 & XM -4.0) after the post-employment spike higher was all but reversed in after trade. The April Employment Report undershot expectations with a print of -4.3k m/m versus expectations of +25k and delivered an unexpected lift in the unemployment rate to 3.7% (3.5% est.) from 3.5%.

  • A closer examination of the data, which revealed that the actual rise in the unemployment rate was only 1.2% before rounding and that March employment had been revised higher from 53k to 61.1k, saw the market quickly reverse course.
  • A move away from the session best level for US tsys and sharply higher NZGB yields post-budget likely aided the ACGB reversal.
  • Cash ACGBs are 1-2bp richer post-data but 4-6bp cheaper on the day with the AU-US 10-year yield differential +1bp at -9bp.
  • Swap rates are sitting mid-range with 6-8bp higher and EFPs 1-2bp wider.
  • The bills strip is steeper with pricing -1 to -13.
  • RBA dated OIS are 4-10bp firmer on the day for meetings beyond September.
  • The local calendar is light until Retail Sales on May 26.
  • With the US calendar relatively light today, US tsys are likely to be on headline watch, particularly about debt ceiling negotiations.