Australian bond yields rise on upbeat Aussie labor data

• Aussie bond yields rise on a surprise drop in Australia’s Unemployment Rate.  
• Markets have scaled back expectations for an RBA rate cut in November.  

Australian government bond prices fell, pushing the yields higher after the official data released at 00:30 GMT showed the seasonally adjusted Unemployment Rate fell to 5.2% in September from August’s 5.3%.  

The market was expecting the jobless rate to remain steady at 5.3%. Further, the Fulltime jobs increased by 26.2K, having dropped by 15.5K in August. Employment rose by 14.7K in September – a big drop from August’s 34.7K rise, although the sharp growth in August was primarily driven by the part-time jobs.  

The data is good enough to keep the Reserve Bank of Australia (RBA) from cutting rates in November, as tweeted by Kyle Rodda, Market Analyst, Australia, IG.  

More importantly, the odds of an RBA rate cut in November dropped to 25% from 45% seen before the release of the labor market report, according to MNI’s Anthony Barton.  

As a result, the yields are gaining altitude. At press time, the 10-year government bond yield is trading at 1.065% – up 1.5 basis points from the low of 1.05% seen before 00:30 GMT.  

Meanwhile, the 10-year yield, which is more sensitive to interest rate expectations, is currently trading at 0.734%, representing a two basis point gain on the low of 0.714% registered before the Aussie data release.