Softer On Global Impulse & Local Data, Payside Swap Flow Helping Move

Weaker U.S. Tsys and NZGBs applied pressure to ACGBs pre-labour market data, with the domestic labour market producing a much more notable than expected uptick in headline employment in November, alongside a move higher in participation which summed to an unchanged unemployment rate. The report also revealed a downtick in both underemployment and underutilisation, while seasonally adjusted hours worked fell, with the ABS noting that “in November, we saw the number of people working reduced hours due to illness increasing by 50,000, back over half a million people (520,000), which is still around a third higher than we usually see at this time of the year.”

• Bonds leaked lower post-data, although the move is fairly limited given the scale of the pre-release cheapening and perhaps some focus on the storm clouds which await the Australian economy further down the road. YM is -6.8, off post-data lows but through its overnight base, while XM is -7.4. Cash ACGBs run ~7bp cheaper across the curve in what has been a fairly parallel shift. EFPs are higher on the day, indicating payside swap flow is aiding the cheapening. Bills have shifted lower, running 6-11 bp cheaper through the reds, with the early bear flattening impulse holding.