Richer, At Sydney Session Bests, Despite Employment Beat

ACGBs (YMZ3 +4.0 & XMZ3 +5.5) sit at Sydney session highs despite employment data surpassing expectations (+64.9k jobs versus +25k est.). A contributing factor was the composition of the data that leaned towards the weaker side. Most of the increase in employment was part-time (+62.1k), with the unemployment rate unchanged at 3.7%.

• (AFR) A stronger-than-expected lift in employment has pushed labour force participation to a record high as the jobs market shows continued resilience in the face of high interest rates. (See link)
• ACGB strength was also assisted by US tsys and JGBs, which displayed strength during the Asia-Pac session. US tsys extended their post-CPI gains, resulting in benchmark yields decreasing by 1-2bps. JGBs also exhibited a robust performance, bolstered by a successful 20-year bond auction.
• Cash ACGBs are 4-5bp richer on the day, with the AU-US 10-year yield differential unchanged at -12bp.
• Swap rates are 3-5bp lower on the day, with 3-year EFP wider.
• The bills strip bull flattens, with pricing +1 to +5.
• RBA-dated OIS pricing is flat to 2bp softer across meetings, with terminal rate expectations unchanged at 4.19%.
• Tomorrow the local calendar is empty, with the next release of note being the RBA Minutes for the September meeting on Tuesday.