A Softer Labour Market

• Focus remains on elevated US borrowing costs, with Bessent flagging an expansion of bond buyback efforts and a greater emphasis on fiscal consolidation, with details of a new fiscal plan to be announced in due course.
• Despite this, US long term yields rose 5-6bp, the 30yr rising to 5.25%, suggesting investors may be sceptical that the Treasury’s efforts will meaningfully alter the US fiscal trajectory.
• Trump’s threat to crush Iran economically, through sanctions on any country deemed to be supporting it, has pushed oil prices higher again to above US$93/bbl as the prospect of a timely resolution recedes further.
• Local jobs data surprised to the downside, with employment falling 15k where a 15k gain was expected and the unemployment rate ticking up to 4.6% rather than holding at 4.5%. The result points to a labour market that is slowly loosening and moving closer to balance, easing pressure on the RBA to hike, with the implied probability of a further rate rise this year now sitting at just above half.