Government bond yields were higher last week with 3y bonds and 10y bonds both closing up 8bps to 2.88% 2.16% respectively. Trading ranges were limited to 10bps-11bps but yields finished the week at or near highs after the AOFM announced a heavy week of bond issuance, with $2.2bn of existing notes and bonds to be issued and a new 2040 index bond to raise $1.25bn. The RBA board meeting statement and the RBA quarterly Statement on Monetary Policy resulted in some weakness in yields as it downgraded growth forecasts and saw higher inflation ahead. 10y yields moved 7bps higher on the day of the board meeting, while the SoMP saw rates also move a little higher.
Offshore 10y bonds were quiet with German and French yields rising 1bps-2bps and US and UK yields falling 2bps and 4bps respectively. US labour/employment data came in over our weekend showing 213k jobs were created (vs an expected 225k). This takes US jobs growth to almost 3m in the past 12 months and is likely to see US rates rise in September.
There were two bond tenders last week; $900m Apr 2024s at a subdued coverage ratio of 2.422 and a well-bid tender of $800m Nov 2020s with a coverage ratio of 3.231.
AUST GOVT BONDS
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