There was very little domestic data last week but there were August inflation figures released in the US, the UK and the Eurozone. Of course, almost all attention was focussed on the US Federal Reserve’s FOMC meeting where the official rate was left unchanged. US and Australian bonds had run up in yield in the two days before the meeting and once the decision was public, rates headed south, reversing the brief run-up and the rises seen from the week before. It seemed that the Fed was worried about global volatility (read China) and chose to keep their fragile growth path on track. Inflation figures in the US, UK and the eurozone were all low to flat.
Australian 3y bond yields finished the week up 5bps to 1.90% after reaching a closing low on Tuesday of 1.83%. Australian 10y bond yields finished at 2.82, also up 5bps after reaching a closing low on Tuesday of 2.71%. US rates reversed the previous week’s 6bps rise, falling back to 2.13% from 2.19% while in the rest of the world 10y rates hardly moved at all. UK rates were effectively unchanged over the week at 1.72%, French rates eased 3bps to 0.96%, German rates increased by 1bps to 0.66% and Italian rates dropped 7bps.
There were two Commonwealth bond tenders; $900m April 2025s and $800m October 2019s with coverage ratios of 2.323 and 3.925 respectively.
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