14 Mar – 18 Mar 2016

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The big driver of global bonds yields this week was the latest US Fed FOMC meeting. Markets were not expecting in change in the official rate and they did not get one. However, members’ expectations indicated two rate rises this year and no longer four indicated by the “dot plots” from the previous meeting. ANZ said US data is stronger now than it was at the time of the last FOMC rate increase and yet FOMC members now expect less rate rises in 2016, which ANZ put down to FOMC concerns regarding offshore events. The US 10yr treasury yield sank from 1.99% to 1.92% and the 2 year treasury yield fell from 0.98% to 0.86%.

Australian bonds yields were drifting lower prior to the FOMC meeting, dropped 8bps on the day and then settled down for the rest of the week. By the week’s end, yields* on 3 year government bonds had fallen 8bps to 1.93%, 10 year yields fell 13bps to 2.55% and 20 year yields fell 13bps to 3.11%. Yields on European 10 year bonds generally followed suit; German bonds fell 6bps to 0.21%, Italian yields fell 6bps to 1.27% and UK yields fell 12bps to 1.45%. France was the exception and rates rose 2bps there while in Japan the 10 year yield fell 1bp to -0.10%. Yes, that’s a minus bond yield on the JGBs. Investors can lend money to the G20’s most-indebted government and pay for the privilege.

*June bond futures pricing. Previously March futures.
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AUST GOVT BONDS

MATURITYCOUPON
(%)
ISSUE
SIZE ($M)
CLOSING
YIELD
Δ WEEKΔ MONTHWEEK
HIGH
WEEK
LOW
15-Jun-164.75219002.020.000.002.022.01
15-Feb-176.00210961.99-0.010.082.011.99
21-Jul-174.25189001.93-0.070.082.021.92
21-Jan-185.50205001.94-0.090.142.051.93
21-Oct-183.25135001.95-0.080.192.081.94
15-Mar-195.25214471.96-0.090.202.091.95
21-Oct-192.75117002.00-0.080.192.131.99
15-Apr-204.50203972.02-0.080.182.142.00
21-Nov-201.7550002.10-0.100.162.242.09
15-May-215.75222992.16-0.100.172.302.15
15-Jul-225.75182002.27-0.110.142.412.27
21-Apr-235.50213002.34-0.120.142.482.34
21-Apr-242.75229002.44-0.120.132.582.44
21-Apr-253.25189002.50-0.130.142.642.50
21-Apr-264.25169002.55-0.130.132.692.55
21-Apr-274.75151002.61-0.130.132.762.61
21-Apr-293.2597002.78-0.130.122.922.78
21-Apr-334.5098002.96-0.130.133.112.95
21-Jun-352.7542503.11-0.130.133.253.11
21-Apr-373.7575003.15-0.130.153.293.15
21-Jun-393.2540003.23-0.120.163.363.22

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