Yields Higher After Jobs Data

ACGBs sit just off session cheaps (YM -4.0 & XM -4.5) after stronger-than-expected employment data sparks a 9bp and 6bp sell-off in respectively 3-year and 10-year bond futures. The Employment Report for March printed a 53k increase and an unemployment rate of 3.5% versus expectations of +20k and 3.6%. Overall, today’s data presented a robust labour market with demand in line with trend supply (higher participation rate and more hours worked) growth.

• Cash ACGBs are 4bp weaker with the AU-US 10-year yield differential +5bp at -12bp.
• Swap rates are 5bp higher with EFPs slightly wider.
• Bills strip shunts 4-8bp cheaper after the data to be -4 to -7 on the day.
• RBA dated OIS firms 4-7bp for meetings beyond August after the data with year-end easing expectations reduced to 14bp. A 23% chance of a 25bp hike in May remains priced.
• Also on the data front, Melbourne Institute Inflation Expectations eased from 5.0% to 4.6%, their lowest in 14 months.
• With the local calendar light until next week, the local market will focus on US Tsys as it navigates US PPI and Initial Jobless Claims today ahead of US Retail Sales and Industrial Production for March on Friday.