Richer With US Tsys Ahead Of US Jobs Data

ACGBs (YM +6.0 & XM +5.5) are richer after a strong NY session for US tsys following weaker-than-expected US data. This comes ahead of US Non-Farm Payrolls data later today.

• Initial jobless claims were notably higher coming in at 249k vs 236k. ISM Mfg was 46.8 vs 48.58. The largest miss was employment which came in at 43.4 vs 49.2 est.
• (AFR) “The market remains hyper mindful that the Fed waited too long to begin raising interest rates as it now wonders if the Fed is too late in transitioning monetary policy,” Quincy Krosby, chief global strategist for LPL Financial, said. “If [July’s] payroll report sees the unemployment rate rising despite an increase in the participation rate, the Fed is going to have a lot of explaining to do.”
• UK gilts rallied sharply after BoE Governor Bailey led the 5-4 decision to lower rates by a quarter-point to 5%.
• Cash ACGBs are 6-7bps with the AU-US 10-year yield differential at +5bps.
• Swap rates are 6-7bps lower.
• The bills strip has bull-flattened, with pricing +1 to +9.
• RBA-dated OIS pricing is flat to 10bps softer across meetings, with 2025 leading. A cumulative 17bps of easing is priced by year-end.
• Today, the local calendar is empty apart from the AOFM’s planned sale of A$600mn of 3.75% 21 May-34 bond.