29 Mar – 01 Apr 2016

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It was the second short week in a row due to the Easter break and bond were relatively quiet. Australian 3 year, 10 year and 20 year bonds were down around 5bps largely on the back of the US market where trading was business as usual. There were some significant economic releases during the week including US Q1 GDP, US February personal consumption expenditure (PCE), US March job data and a speech from Janet Yellen that moved markets. The Fed’s preferred measure of inflation, “Core” PCE, was less than expected and indicated inflation had stalled, while “third estimate” US GDP figures were revised up from an annualised 1.0% to 1.4%. The PCE figures had sent yields lower and the slightly higher GDP numbers were not enough to reverse the direction. Janet Yellen then gave a ‘dovish’ speech, implying that the US will not raise rates while other central banks are continuing to stimulate their economies. The previous week her fellow FOMC members had made some ‘hawkish comments’ so markets moved around 8bps to 10bps lower on the news. Ms Yellen avoided stating the April FOMC meeting was “live” (for an interest rate increase) and advised caution in “adjusting policy”. The week finished with US March jobs data and while the number of jobs created was a positive, a higher participation rate meant the unemployment rate in the US rose to 5.0%.

US 10 bond yields finished the week 13 bps lower with the largest movement on the day of Yellen’s speech. 10 year yields in the UK fell 4bps, Germany 5bps, France 7bps and Italy 8bps. Japanese 10 year bonds rose 3 bps, but they are still less than zero at -0.07%.

There were the standard two bond tenders and one Treasury note tender; $900 million November 2027s and $800 million November 2020s were sold at coverage ratios of 2.5389 and 4.5687 respectively.

gov-bonds-1apr16
Complete list of government and corporate debt issues
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AUST GOVT BONDS

MATURITYCOUPON
(%)
ISSUE
SIZE ($M)
CLOSING
YIELD
Δ WEEKΔ MONTHWEEK
HIGH
WEEK
LOW
15-Jun-164.75219002.020.010.042.032.01
15-Feb-176.00210962.020.000.102.032.01
21-Jul-174.25189001.980.030.171.981.93
21-Jan-185.50205001.94-0.020.181.961.89
21-Oct-183.25135001.94-0.040.221.981.90
15-Mar-195.25214471.94-0.050.211.991.90
21-Oct-192.75117001.98-0.050.222.031.94
15-Apr-204.50203971.99-0.050.202.051.96
21-Nov-201.7550002.08-0.060.182.142.05
15-May-215.75222992.13-0.050.192.182.09
15-Jul-225.75182002.24-0.060.152.292.20
21-Apr-235.50213002.31-0.050.132.362.27
21-Apr-242.75229002.41-0.050.132.462.37
21-Apr-253.25189002.48-0.050.142.522.44
21-Apr-264.25169002.53-0.050.142.572.49
21-Apr-274.75151002.59-0.050.132.632.55
21-Apr-293.2597002.75-0.050.132.802.71
21-Apr-334.5098002.93-0.050.132.982.89
21-Jun-352.7542503.09-0.050.143.143.06
21-Apr-373.7575003.14-0.050.143.183.10
21-Jun-393.2540003.22-0.040.173.263.18

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