AUSSIE BONDS: Richer After Jobs Data, 3/10 YC Flattest Since March

ACGBs (YM +9.5 & XM +10) are stronger, extending overnight gains, after mixed signals from November’s employment report.

• November employment fell 21.3k, but the unemployment rate was unchanged at 4.3% - and so mixed relative to consensus. RBA Governor Bullock said that the Board is likely to discuss a prolonged pause or a hike in 2026, depending on the data, and that this release is likely to be consistent with the Board's desire for more information. It also considers the underemployment & youth unemployment rates as well as hours worked.
• Cash US tsys are 1-2bps richer in today's Asia-Pac session, extending the post-FOMC rally.
• Cash ACGBs are 9-10bps richer with the AU-US 10-year yield differential at +58bps.
• Despite today’s rally, the 3/10 curve continues to flatten, with the level now the flattest since March (see chart).
• The bills strip has bull-flattened, with pricing flat to +10.
• RBA-dated OIS pricing is little changed after the data. Pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 24% for February to 96% by June and 185% by December 2026.  

Bloomberg Finance LP