02 May – 06 May 2016

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It was another week where movements in Australian bond yields had little to do with offshore bond markets but were driven instead by announcements out of the RBA. The RBA kicked off proceedings by reducing the official cash rate by 25bps, causing an across the curve drop in yields as investors digested the ramifications of a central bank which was caught by a surprise March CPI figure. The RBA then followed up with its quarterly Statement of Monetary Policy which lowered inflation forecasts and upped growth lightly. This compounded the markets’ view of stagnant domestic prices and the possibility of further interest rate cuts. US yields had been generally falling over the week anyway so every force, offshore and domestic, was pushing yields lower.

So lower they went. So low, in fact, 3 year bond yields are at their all-time lows. 3 year bonds fell 29bps from 1.85% to 1.56% and 10 year bonds fell 23bps to 2.29%. Offshore, yields fell in most advanced economies; US 10 year yields fell 6bps to 1.77%, in the UK 10 year yields fell a rather large 18bps to 1.42%, Germany’s 10 year yield fell 13bps to 0.14%, France’s fell 11bps to 0.52%, Italy’s fell 1bp to 1.49% and Japan’s 10 year yield went deeper into negative territory and finished the week at -0.12%.

This week there were three Treasury bond tenders and no Treasury note tenders; $300 million April 2033s, $700 million April 2026s and $700 million November 2020s. Coverage ratios were 2.450, 2.8857 and 3.2429 respectively.

gov-bond-6may
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-164.75219001.75-0.24-0.271.991.74
15-Feb-176.00210961.66-0.22-0.351.891.66
21-Jul-174.25189001.64-0.24-0.341.891.64
21-Jan-185.50205001.58-0.28-0.361.871.58
21-Oct-183.25135001.57-0.29-0.361.871.57
15-Mar-195.25214471.57-0.29-0.371.861.57
21-Oct-192.75117001.60-0.29-0.381.901.60
15-Apr-204.50203971.63-0.28-0.361.921.63
21-Nov-201.7550001.73-0.27-0.352.001.73
15-May-215.75222991.80-0.26-0.332.061.80
15-Jul-225.75182001.95-0.26-0.302.221.95
21-Apr-235.50213002.05-0.25-0.272.302.05
21-Apr-242.75229002.16-0.24-0.252.402.16
21-Apr-253.25189002.24-0.23-0.242.472.24
21-Apr-264.25169002.29-0.23-0.242.522.29
21-Apr-274.75151002.35-0.23-0.242.582.35
21-Apr-293.2597002.52-0.21-0.232.742.52
21-Apr-334.5098002.70-0.22-0.232.942.70
21-Jun-352.7542502.88-0.22-0.213.122.88
21-Apr-373.7575002.92-0.22-0.213.162.92
21-Jun-393.2540003.02-0.22-0.203.253.02

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