AUSTRALIA DATA: Gradual Labour Market Easing Stalled In Q1
Apr-18 02:44
The headline March jobs figure was weaker than expected showing employment down 6.6k but February was revised up 1.1k to 117.6k. Some payback was expected and given February’s outsized reading, but it was relatively muted and importantly focused in part-time jobs with full-time continuing to rise. The unemployment rate rose 0.1pp to 3.8%. Data show that the labour market remains tight and so the RBA’s stance is unlikely to change.
- The April employment report on May 16 might not give greater clarity on underlying labour conditions as it could be impacted by school holidays, as April 2023 was. Therefore it is important to look through the monthly volatility at averages and quarterly changes.
- The economy generated just over 10k more jobs in Q1 than the increase in the labour force, thus signalling that despite slower growth labour demand remains robust. The shift back towards full-time jobs and the increase in hours worked are consistent with this.
- Employment growth slowed to 2.7% y/y in Q1 from 3.0% in Q4 – the RBA is forecasting 2.0% for Q2. Job creation rose in Q1 with 122.3k new positions after Q4’s 52.9k but below Q1 2023’s 157k. Employment growth shifted back towards full-time (FT), signalling improved employer confidence. FT rose 125.9k in Q1 (Q4 -44.3k) whereas part-time (PT) fell 3.7k (Q4 +97.3k), the first drop since Q4 2022.
- Hours worked posted their second straight increase in March to be marginally higher on the quarter and up 1.7% y/y with the strength again concentrated in FT. Underemployment fell 0.1pp as a result.
- The decline in employment with the 0.1% m/m rise in the labour force meant that the unemployment rate ticked up after its sharp February fall. But it was a high 3.8% coming in at 3.843%, so not far from consensus’ 3.9% and prone to an upward revision next month. The RBA expects 4.2% in Q2.
Australia employment vs hours 3/3m average annualised %
Source: MNI - Market News/ABS
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JGBS: Bonds Twist-Flatten At Lunch, Awaiting BoJ Policy Decision
Mar-19 02:31
At the Tokyo lunch break, JGB futures have more than reversed morning weakness to be +8 compared to the settlement levels.
- There hasn’t been much in the way of domestic drivers to flag as the market awaits the BoJ’s Policy Decision.
- While a move in March is not set in stone, we anticipate the BoJ to announce the attainment of its 2% price stability target and exit NIRP.
- Despite the debate in the markets over March versus April, the key takeaway from today’s meeting is that the BoJ seems to have made up its mind to act by the end of spring.
- Therefore, even if the BoJ opts to hold off in March, it would be expected to provide a clear indication that it is contemplating action at its next policy meeting scheduled for April 25th-26th. (See MNI BoJ Preview here)
- The cash JGB curve twist-flattened, pivoting at the 2s, with yields 1bp higher to 2bps lower. The benchmark 10-year yield is 1.0bp higher at 0.757% versus its YTD high of 0.801%.
- The swaps curve has also twist-steepened, with rates 2bps lower to 2bps higher. Swap spreads are tighter out to the 10-year and wider beyond.
KRW: 1 Month USD/KRW Hits Fresh Highs For March Amid Tech Related Equity Weakness
Mar-19 02:05
Upside pressures in USD/KRW persist. The 1 month NDF is at fresh highs for March, last around 1335/36. Spot is back to 1337/38. Follow through USD buying has paused somewhat though. Focus is likely to be on whether we can test above 1340, which was seen back in Mid Feb, albeit briefly. Ups
- General softness in equity sentiment is weighing on the won, although the 1 month NDF is only down a further 0.10% versus end NY levels from Monday. The Kospi is underperforming, off close to 1.2%, with tech related indices softer through the region today.
- Earlier comments from President Yoon called for all out efforts to stabilize prices. The Vice Minister for Trade And Industry noted that exports likely continued to recover in March. On Thursday we get the first 20-day of trade data for March.
AUSSIE BONDS: Market Awaits RBA & BoJ Policy Decisions
Mar-19 01:52
ACGBs (YM flat & XM -2.0) are flat to slightly cheaper, after dealing in relatively narrow ranges, ahead of the RBA policy Decision.
- The RBA is unanimously expected to leave rates at 4.35%. We expect some form of tightening bias to be retained as the data since the last meeting has been broadly in line with the RBA’s projections, while the significant uncertainties discussed last month have not dissipated and the risks are still “broadly balanced”. Thus, the meeting statement will probably be little changed compared with February. (See MNI RBA Preview here)
- The BoJ is also due to deliver its Policy Decision around the same time. While a move in March is not set in stone, we anticipate the BoJ to announce the attainment of its 2% price stability target and exit NIRP. (See MNI BoJ Preview here)
- Cash ACGBs are flat to 2bps cheaper, with the AU-US 10-year yield differential 1bp lower at -19bps.
- Swap rates are 1-3bps higher with the 3s10s curve steeper.
- The bills strip is slightly cheaper, with pricing -1 to -2.
- RBA-dated OIS pricing is marginally softer for late-24 meetings. A cumulative 36bps of easing is priced by year-end.
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