Sitting At The Session’s Best Levels After Jobs Data Miss

ACGBs (YM +11.0 & XM +12.5) have richened 7bps since January’s Employment Report disappointed with a jobs gain of just 481 versus expectations of +25k. The Unemployment Rate also rose to 4.1% versus 4.0% est. and 3.9% prior.

• The January labour data showed more convincing signs that the labour market is easing, but the ABS had some holiday-related caveats. To add to the generally softer tone of the report, hours worked fell 2.5% m/m to be up only 0.7% y/y, the lowest in 4 years ex-COVID.
• Accordingly, the data is likely to confirm that the RBA is on hold for now but services inflation will need to show significant moderation as it is delaying the target return.
• Meanwhile, Melbourne Institute Consumer Inflation Expectations for February printed at 4.5%. Expectations have been at 4.5% for the last 3 months.
• Cash ACGBs are 6-7bps richer after the data and 12bps richer on the day.
• The AU-US 10-year yield differential is 5bps lower at -9bps versus a pre-data level of -4bps.
• Swap rates are 10-12bps lower on the day.
• The bills strip has bull-flattened, with pricing +1 to +12.
• RBA-dated OIS pricing is 4-11bps softer for meetings beyond May, with a cumulative 38bps of easing priced by year-end.
• Tomorrow, the local calendar is empty.