Richer After Business Conditions Dip, BoJ Policy Decision Due

ACGBs (YM +4.0 & XM +2.5) are richer and at Sydney session highs after business conditions, which measure sales, employment and profitability, eased in the final month of last year. Confidence remained at below-average levels. (See Bloomberg link)

• The SEEK advertised salary index rose a further 0.3% m/m in December to hold the annual rate steady at 4.5% y/y, within the range it’s been in for over a year. The series peaked in September at 4.8% y/y. Wages growth remains contained but elevated and the RBA would like to see productivity growth pick up if pay is going to stay around these rates. The Q4 WPI prints on February 21.
• Cash US tsys are dealing slightly richer in today’s Asia-Pac session. There has been little meaningful news flow so far today. The key event on the Asian calendar is the BoJ policy Decision. (See MNI’s BoJ Preview here)
• Cash ACGBs are 2-4bps richer, with the AU-US 10-year yield differential unchanged at +11bps.
• Swap rates are 4-5bps lower.
• The bills strip is flat to +4, with the reds leading.
• RBA-dated OIS pricing is flat to 4bps softer across meetings, with December leading. A cumulative 40bps of easing is priced by year-end.