- With a stronger than expected labour market print, reference rates rose yesterday.
- Offerings of 5.55% for 1 year term deposit are becoming more available in the BBB space as 1 year Aussie swap reached 4.60%.
- Outright 3 month NCD levels are reaching 4.74% as 3 month BBSW has risen off the back of an unexpected RBA hike.
- 3 month NCD levels may touch 4.80% as 3 month BBSW has climbed a further 6 basis points today.
Labour Market Continues to Show Strength
- Yesterday domestic employment data came in stronger than expected.
- Total employment rose by 75.9K from last months print of -4K.
- The unemployment decreased from 3.7% to 3.6% and participation rate rose to 66.9% from 66.7%.
- Whilst this print does indicate that the labour market is still tight, caution should be taken when interpreting these results.
- The April 2023 print conceded fully with the Easter holidays as opposed to a partial overlap.
- This has only occurred three times over the last 20 years.
- Each time, jobs growth displayed a pattern of softness in April followed by a pick up in May.
- Even with this in account the labour market is still running tight and will be an area of concern for RBA as they try to tame inflation.
- Off the back of the print there was a 5-10 basis point pick up in reference rates as the market priced in more restrictive monetary policy.