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Slightly Richer, June’s Employment Report Tomorrow

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ACGBs (YM flat & XM +1.5) are slightly richer and sit near the bottom of today’s ranges. With the domestic calendar light, the local market has drifted with cash US tsys, which are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s solid gains.

  • Today’s lacklustre performance may also reflect some spillover from NZGBs. NZGB benchmarks have cheapened 3-5bps following today’s release of Q2 CPI. While the headline CPI came in moderately lower than expected, the important domestically driven non-tradeables came in slightly higher than the RBNZ expected.
  • 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.
  • Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session.
  • Cash ACGBs are 1bp richer, with the AU-US 10-year yield differential at +7bps.
  • Swap rates are 3bps lower.
  • The bills strip has bull-flattened, with pricing flat to +5.
  • RBA-dated OIS pricing is 1-4bps softer across meetings. Terminal rate expectations sit at 4.40%.
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ACGBs (YM flat & XM +1.5) are slightly richer and sit near the bottom of today’s ranges. With the domestic calendar light, the local market has drifted with cash US tsys, which are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s solid gains.

  • Today’s lacklustre performance may also reflect some spillover from NZGBs. NZGB benchmarks have cheapened 3-5bps following today’s release of Q2 CPI. While the headline CPI came in moderately lower than expected, the important domestically driven non-tradeables came in slightly higher than the RBNZ expected.
  • 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.
  • Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session.
  • Cash ACGBs are 1bp richer, with the AU-US 10-year yield differential at +7bps.
  • Swap rates are 3bps lower.
  • The bills strip has bull-flattened, with pricing flat to +5.
  • RBA-dated OIS pricing is 1-4bps softer across meetings. Terminal rate expectations sit at 4.40%.