AUSTRALIA: May Unemployment Rate Expected To Stay At 4.1%

ACGBs (YM -1.0 & XM -3.0) are modestly cheaper on a data-light Sydney session ahead of tomorrow’s RBA Policy Decision. 

• Cash US tsys have twist-steepened in today’s Asia-Pac session, with yields 2.5bps lower to 2.5bps higher, as the market continues to digest late Friday news that Moody's Ratings downgraded the US credit score.
• “The move follows downgrades by Fitch Ratings and S&P Global Ratings, with Moody's citing a decline in fiscal metrics that can no longer be counterbalanced by the US' economic and financial strengths." (per BBG)
• Cash ACGBs are 1-3bps cheaper with the AU-US 10-year yield differential at flat.
• The bills strip little changed.
• RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in May is given a 94% probability, with a cumulative 76bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• (AFR) “The consumer price index for the March quarter was a good enough result to warrant a 25 basis point policy rate cut at the May Reserve Bank board meeting, but that is about it.” (see BBG link)
• This week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond on Wednesday and A$800mn of the 2.75% 21 November 2028 bond on Friday.

• CHINA APR INDUSTRIAL OUTPUT +6.1% Y/Y VS MEDIAN +5.7% Y/Y: NBS
• CHINA JAN-APR INDUSTRIAL OUTPUT +6.4% Y/Y VS JAN-MAR +6.5% Y/Y
• CHINA APR RETAIL SALES +5.1% Y/Y VS MEDIAN +5.9% Y/Y
• CHINA JAN-APR RETAIL SALES +4.7% Y/Y VS JAN-MAR +4.6% Y/Y
• CHINA YTD FIXED-ASSET INVESTMENT +4.0% Y/Y VS MEDIAN +4.2% Y/Y
• CHINA YTD PROPERTY INVESTMENT -10.3% Y/Y VS MEDIAN -10.0% Y/Y
• CHINA APR UNEMPLOYMENT RATE +5.1% VS MAR +5.2%

• April's house price data continued to highlight the challenges for authorities in achieving a recovery in the multi-year downturn in house prices.
• April's new house prices decline increased from March to -0.12%, representing 23 consecutive months of contracting.
• April's used house prices decline increased from March to -0.41%, representing a contraction in every month since the last expansion in April 2023.
• New home prices did rise in 22 cities MoM compared to March and 3 cities saw growth YoY.
• Used home prices in 5 cities rose MoM.
• Beijing saw a rise in new home prices of +0.01% MoM yet declined -5% YoY.
• Shanghai saw a rise in new home prices of +0.5% MoM whilst delivering a +5.9% YoY increase.