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Richer, Little Changed After Jobs Data Despite Beat

AUSSIE BONDS

ACGBs (YM +8.2 & XM +8.4) remain stronger on the day, showing little change following a stronger-than-expected May Employment Report.

  • Employment rose by 39.7k in May, with full-time positions increasing by 41.7k and part-time positions decreasing by 2.1k.
  • The unemployment rate fell to 4.0% in May from 4.1%, aligning with the median estimate.
  • Cash ACGBs are 7-9bps richer on the day but ~1bp cheaper after the data. The AU-US 10-year yield differential sits at -11bps.
  • Swap rates are 8-9bps lower on the day.
  • The bills strip has bull-flattened, with pricing flat to +8.
  • RBA-dated OIS pricing remains 3-9bps softer on the day for meetings beyond September but slightly firmer after the data. 10bps of easing is priced by year-end.

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