- Aussie bond yields are cheering the big beat on Aussie Employment Change.
- The jobless rate unexpectedly declined to 5.1% in December.
- Full-time jobs, however, declined and could cap upside in yields.
Australian government bond yields are rising in response to a better-than-expected Aussie jobs report released at 00:30 GMT.
At press time, the yield on the 10-year government bond is trading at 1.12%, representing a two basis point gain on the low of 1.09% seen ahead of the jobs
report.
The two-year yield, which is more sensitive to interest rate expectations, has so far added more than four basis points to trade at 0.75%.
Australia’s jobless rate dipped to 5.1% in December from the prior month’s 5.2%. Meanwhile, the economy added 28.9K jobs, which were far higher than the forecasted figure of 15.K in December.
The job growth, however, was mainly fueled by part-time work, as full-time jobs declined by 0.3K. So far markets have not paid attention to that detail, as evidenced by the uptick in yields and AUD/USD’s 38-pip rise.
However, the jobs report is not strong enough to force markets to price out expectations for an RBA rate cut at the Feb. 4 meeting. As a result, both yields and the AUD may trim gains.
It’s worth noting that markets were pricing about 56% chance of a 25 basis point rate cut ahead of the jobs report.
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