29 Aug – 2 Sep 2016

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A week ago markets were waiting for Janet Yellen’s Jackson Hole speech. This week markets were waiting for US non-farm payroll numbers to give an indication as to the robustness of the US economy. The report was out on Friday night, so Australian bond markets did little during the week. The week finished with 3 year bond yields at 1.42%, up 4 bps from its previous weekly close while 10 year bonds remained unchanged over the week at 1.86%. The 20 year bond yield fell 1bp to 2.40%.

The Australian-US 10 year spread has been trending down for some time but this week Australian yields were effectively steady and US yields were down a tad so the spread widened marginally and finished the week at 26bps, up from 23bps.

Offshore, yields were generally higher except in the US. US personal consumer expenditure (PCE) figures for July led to a 7bps drop in 10 year bond yields at the start of the week. US August non-farm payrolls, described by ANZ as “much anticipated”, were vaguely disappointing even though the US unemployment rate dropped to 4.8%. However, investors saw the positive in them and US yields ended up on the day. By the end of the week the US 10 year yield was 3bps lower at 1.60%.

In other major centres, German and Japanese 10 year yields both rose 3bps to -0.05% and -0.04% respectively, while the yield on UK 10 year gilts rose 6bps to 0.63%.

This week AOFM bond sales were back to two vanilla bond issues. $1 billion April 2026s and $900 million April 2020s were issued with coverage ratios of 2.085 and 2.0944 respectively.

Complete list of government and corporate debt issues

160903 gov 3y

 

AUST GOVT BONDS

MATURITYCOUPON
(%)
ISSUE
SIZE ($M)
CLOSING
YIELD
Δ WEEKΔ MONTHWEEK
HIGH
WEEK
LOW
15-Feb-176.00118281.580.10-0.011.581.49
21-Jul-174.25189001.510.06-0.041.511.47
21-Jan-185.50205001.480.06-0.031.481.44
21-Oct-183.25181001.480.05-0.031.481.43
15-Mar-195.25229471.450.04-0.011.451.40
21-Oct-192.75217001.450.04-0.011.451.40
15-Apr-204.50233971.440.03-0.011.441.41
21-Nov-201.75152001.500.030.001.501.47
15-May-215.75243991.550.030.001.551.51
15-Jul-225.75214001.650.040.011.651.61
21-Apr-235.50213001.710.020.011.711.67
21-Apr-242.75247001.770.01-0.011.781.73
21-Apr-253.25261001.810.00-0.021.841.79
21-Apr-264.25291001.850.00-0.021.881.82
21-Apr-274.75256001.900.00-0.021.931.87
21-Nov-272.75104001.95-0.01-0.021.981.92
21-May-282.2570002.000.00-0.022.031.98
21-Apr-293.25120002.060.000.002.082.03
21-Apr-334.50107002.24-0.010.032.272.22
21-Jun-352.7555502.40-0.010.032.432.38
21-Apr-373.7588002.450.000.042.482.43
21-Jun-393.2540002.550.000.042.572.52