Slightly Richer, Awaiting Minimum Wage Outcome

ACGBs are stronger (YM +2.0 & XM +2.0) after US tsys finished near NY session highs with benchmark yields 5-7bp lower ahead of US Non-Farm Payrolls late today. Tsys cheapened early in the NY session following stronger-than-expected ADP private employment data, but that was quickly reversed after lower-than-expected unit labour costs (4.2% vs. 6.2%).

• Cash ACGBs opened 2-3bp richer with the AU-US 10-year yield differential +4bp at flat.
• Swap rates opened 2bp lower.
• The bills strip pricing is -1 to +2.
• RBA dated OIS opened little changed across meetings.
• There is likely to be greater interest in the minimum wage outcome set to be handed down. Reports suggest this will take place at 10am local time (01:00 BST). The unions have been arguing for a 7% rise to keep in line with the cost of living and Treasury assumed it would be around there in its budget projections. RBA Governor Lowe has said that any increases above 2-3% plus productivity growth over time would be inflationary. (link)
• In a Bloomberg article, Australia’s central bank will probably raise interest rates three more times in coming months to counter persistently elevated inflation driven by surging services prices, according to two economists. (link)
• The local calendar sees Home Loans data for April slated.
• The AOFM plans to sell A$500mn of the 4.25% 21 April 2026 bond.