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Post-Wage Squeeze Continues

AUSSIE BONDS

The space continues to squeeze higher in the wake of the Q3 wage price data, which failed to provide any upside surprise, printing in-line with broader expectations. The firming on the back of the in-line print is likely being facilitated by the aggressive market positioning when it comes to the RBA hiking cycle (when compared to the Bank's own forward guidance). A reminder that the RBA has continually pointed to the likelihood that wages will need to rise by 3+% Y/Y to foster the inflationary outcome that it desires. The curve has exhibited a bull steepening pattern, with YM +6.5 & XM +1.0. The Bill strip trades flat to +8 through the reds, with IRM2-Z2 outperforming. We will provide a more comprehensive update on RBA pricing after today's settlement.

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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