Richer But Off Best Levels

ACGBs (YM +1.0 & XM +3.0) are stronger but sit in the middle of today’s ranges.

• Westpac’s Leading Economic Index was unchanged in June.
• June jobs data prints tomorrow and will be watched closely for signs of a pickup in the pace of labour market easing ahead of Q2 CPI due on July 31 and the next RBA meeting on August 6.
• Even if the unemployment rate prints in line with consensus at 4.1%, the Q2 average will be close to the RBA’s May forecast of 4.0%, but still above Q1.
• Bloomberg consensus is forecasting a 20k increase in new jobs, slightly below the 3-month average to May. This would result in 97k new jobs in Q2 down from Q1’s 126.3k but above Q4’s 56.2k, so some moderation but still robust.
• Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session.
• Cash ACGBs are 1-3bps richer, with the AU-US 10-year yield differential at +6bps.
• The latest round of ACGB Nov-33 supply showed strong demand metrics, with the weighted average yield printing through prevailing mids and the cover ratio moving comfortably above 4.0x to 4.2600x.
• Swap rates are 3-4bps lower.
• The bills strip has bull-flattened, with pricing flat to +6.
• RBA-dated OIS pricing is 2-5bps softer across meetings. Terminal rate expectations sit at 4.39%.