Richer After Employment Gain Misses

ACGBs (YM -6.0 & XM -5.0) are richer after the Employment Report for December surprised on the downside, printing -65k versus expectations of +15k. The Unemployment Rate was however in line at 3.9%.

• “The strength in employment in October and November and the fall in December, reflected changes in the timing of employment growth in the last few months of 2023, compared with earlier years.", according to the ABS. "While the December employment fall was large, the number of employed people was still 52,000 higher than September.”
• Cash ACGBs are 2-3bps richer after the data but remain 6-7bps cheaper on the day. The AU-US 10-year yield differential is 3bps wider at +18bps.
• Swap rates are 4-6bps higher on the day, and 2-3bps lower post-data.
• The bills strip has maintained its bear-steepening, with pricing flat to -6.
• RBA-dated OIS pricing is 2-3bps softer for meetings beyond March after the data. A cumulative 38bps of easing is priced by year-end.