What is the RBA going to make of these employment figures today?
Mr. S. may well be steering the porcelain bus as we speak …
The market is certainly starting to talk about further rate cuts. I think that is a little premature, but swaps data is showing the probability of a July cut rising to just under 50%, from 25% pre the employment figures.
Things to note;
- Employment data is perceived as a lagging indicator
- While data has been on the improve, surveys are not so sanguine
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In the immediate wake of the figures I expect no action from the RBA in February (OIS pricing has the probability of a 25 basis point cut at 10%), though they may speak in a more dovish tone in the accompanying statement. Next meeting February 4.
