Daily Flows

• Off the back of stronger than expected domestic labour data, the yield curve sold-off, pushing rates from 6 months to 5 years higher.
• This did not impact ADI offerings in the afternoon, with levels of 5.75% for 1 year and 5.65% for 6 months still enough to attract flow.
• Yesterday, market participants that had space for BBB- exposure were able to lock in NCD margins of +50 for 3 months from a domestic bank.

Labour Market Remains Resilient

• Domestic labour data printed yesterday, with an increase in full time employment driving a stronger than expected print.
• Employment increased by 32.6K, unemployment remained at 3.5% and the participation rate came in at 66.8%, slightly lower than forecasted 66.9%.
• The labour market continues to show strength, averaging +40K increase in employment over the last 3 months.
• Although labour data tends to be a lagging economic indicator, markets responded to persistent tightness in the labour market with a sell off in swap rates.
• Looking forward, this print is consistent with economists forecasts of the labour market reaching 4% unemployment by the end of the year.
• The RBA have voiced rising wages and low productivity as a concern in the fight against inflation. This print may add further concern and increase the chances of future rate hikes.