Summary: ACGB bond yields up in Australia; ACGB 10-year spread to US Treasury yield steady at -3bps; 10-year bond yields up in US, major European markets; $2.8 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields started the week with big rise which accounted for much of the week’s net gain. Yields then moved little higher before retreating modestly midweek. Modest increases took place over the remaining two days. At the end of the week, the 3-year ACGB yield had gained 16bps to 3.68%, the 10-year yield had added 15bps to 4.14% while the 20-year yield finished 13bps higher at 4.44%. The spread between US and Australian 10-year Treasury bond yields remained at -3bps.
Over in the US, 10-year bond yields jumped at the start of the week, partially retracing some of that gain the next day and increased modestly over the next three days.
The ISM’s January Services PMI was really the week’s only report of note and it came out on Monday. The index rose from 50.4 to 53.4, higher than expected.
By the end of the week, the US 2-year Treasury bond yield had added 12bps to 4.48% while 10-year and 30-year yields both finished 15bps higher at 4.17% and 4.37% respectively.
In major euro-zone markets, 10-year bond yields followed a broadly similar path their US counterpart.
By the end of the week, the German 10-year bund yield had gained 14bps to 2.38% while the French 10-year OAT yield added 15bps to 2.89%. The Italian 10-year BTP yield increased by 16bps to 3.96% over the week while the British 10-year gilt yield finished 14bps higher at 4.26%.
The AOFM held the usual vanilla bond tender this week; $800 million of November 2028s were priced at a nominal yield of 3.68%. There were also two Treasury note tenders which raised $2.0 billion on a short-term basis.
The gross value of all bonds issued by the AOFM in the 2023/2024 financial year (not taking into account buy-backs or short-term Treasury note tenders) is $27.9 billion. There are currently $850.65 billion of Treasury bonds and $40.686 billion of Treasury index-linked bonds on issue. The next series to mature does so on 21 April 2024 when $35.90 billion worth of bonds are due. There are also $27.00 billion of short-term Treasury notes outstanding.