Summary: 10-year bond yield up in Australia; ACGB 10-year spread to US Treasury yield rises from -20bps to -10bps; 10-year bond yields up in US, major European markets; $15.5 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields increased over the first three days of the week and then declined over the remainder. By the end of the week, the 3-year ACGB yield had gained 18bps to 3.10%, the 10-year yield had added 15bps to 3.47% while the 20-year yield finished 12bps higher at 3.89%. The spread between US and Australian 10-year Treasury bond yields “widened” from -20bps to -10bps.
Over in the US, 10-year bond yields started the week with a substantial rise which was followed by alternating “down“ and “up” days.
The Atlanta Fed’s Nowcast model was updated on Tuesday. The March quarter GDP growth estimate remained at 2.5% annualised, or a 0.6% expansion over the quarter.
The Conference Board’s March reading of its Leading Index posted a 1.3% drop on Thursday, worse than expected.
S&P Global Market Intelligence’s latest flash reading of its composite index was released at the end of the week, with the index rising from March’s final reading of 52.3 to 53.5. The manufacturing index increased from 49.2 to 50.4 and the services index added 1.1 points to 53.7. S&P Global’s Chris Williamson said, “The latest survey adds to signs that business activity has regained growth momentum after contracting over the seven months to January…”
By this point, the US 2-year Treasury bond yield had gained 6bps to 4.17%, the 10-year yield had added 5bps to 3.57% while the 30-year yield finished 4bps higher at 3.78%.
In major euro-zone markets, 10-year bond yields took a similar path to US Treasury bonds.
On Tuesday night (AEDT), Germany’s ZEW April survey indicated its Economic Sentiment index had fallen again, this time from March’s reading of 13.0 to 4.1. ZEW’s current conditions index improved, from -46.5 to -32.5. ZEW President Achim Wambach noted respondents had pointed to tightening conditions for bank credit and still-high inflation rates.
The results of April’s consumer sentiment survey were released on Thursday night (AEDT) and they indicated euro-zone sentiment had improved after a minor dip in March.
S&P Global Market Intelligence released its April flash PMI figures for the euro-zone some hours before the US figures on Friday. The preliminary reading of the composite index was 54.4, up from March’s final reading of 53.7.
By this point, the German 10-year bond yield had gained 4bps to 2.48% while the French 10-year OAT yield had added 5bps to 3.05%. The Italian 10-year BTP yield increased by 8bps over the week to 4.36% while the British 10-year gilt yield finished 11bps higher at 3.90%.
The AOFM held just the one, large syndicated sale during the week. $14 billion of new December 2034s were priced at 3.635% with $61 billion of bids. There were also two Treasury note tenders which raised a total of $1.5 billion on a short-term basis.
The gross value of all bonds issued by the AOFM in the 2022/2023 financial year-to-date (not taking into account buy-backs or short-term Treasury note tenders) is $74.80 billion. There are currently $818.25 billion of Treasury bonds and $38.836 billion of Treasury index-linked bonds on issue after $34.20 billion matured on Friday. The next series to mature does so on 21 April 2024 when $35.90 billion worth of bonds are due. There are also $36.00 billion of short-term Treasury notes currently outstanding.
AUSTRALIAN GOVERNMENT BONDS
| MATURITY | COUPON (%) | ISSUE SIZE ($M) | CLOSING YIELD | Δ WEEK | Δ MONTH | WEEK HIGH | WEEK LOW |
|---|---|---|---|---|---|---|---|
| 21-Apr-24 | 2.75 | 35,900 | 3.46 | 0.25 | 0.22 | 3.47 | 3.28 |
| 21-Nov-24 | 0.25 | 41,300 | 3.29 | 0.23 | 0.18 | 3.31 | 3.11 |
| 21-Apr-25 | 3.25 | 41,500 | 3.19 | 0.23 | 0.16 | 3.20 | 3.01 |
| 21-Nov-25 | 0.25 | 39,200 | 3.13 | 0.22 | 0.14 | 3.14 | 2.96 |
| 21-Apr-26 | 4.25 | 39,100 | 3.16 | 0.22 | 0.15 | 3.17 | 2.99 |
| 21-Sep-26 | 0.50 | 37,800 | 3.17 | 0.22 | 0.13 | 3.19 | 3.00 |
| 21-Apr-27 | 4.75 | 36,700 | 3.19 | 0.21 | 0.12 | 3.20 | 3.02 |
| 21-Nov-27 | 2.75 | 31,400 | 3.22 | 0.22 | 0.12 | 3.23 | 3.05 |
| 21-May-28 | 2.25 | 30,200 | 3.25 | 0.23 | 0.12 | 3.26 | 3.08 |
| 21-Nov-28 | 2.75 | 34,100 | 3.28 | 0.23 | 0.12 | 3.29 | 3.11 |
| 21-Apr-29 | 3.25 | 35,800 | 3.31 | 0.23 | 0.11 | 3.32 | 3.16 |
| 21-Nov-29 | 2.75 | 34,700 | 3.35 | 0.23 | 0.11 | 3.36 | 3.21 |
| 21-May-30 | 2.50 | 37,100 | 3.38 | 0.22 | 0.10 | 3.39 | 3.24 |
| 21-Dec-30 | 1.00 | 38,700 | 3.42 | 0.22 | 0.10 | 3.44 | 3.29 |
| 21-Jun-31 | 1.50 | 38,100 | 3.45 | 0.23 | 0.10 | 3.46 | 3.31 |
| 21-Nov-31 | 1.00 | 21,000 | 3.47 | 0.23 | 0.10 | 3.49 | 3.34 |
| 21-May-32 | 1.25 | 39,300 | 3.48 | 0.23 | 0.11 | 3.50 | 3.35 |
| 21-Nov-32 | 1.75 | 29,000 | 3.49 | 0.23 | 0.10 | 3.51 | 3.37 |
| 21-Apr-33 | 4.50 | 23,600 | 3.50 | 0.22 | 0.10 | 3.51 | 3.37 |
| 21-Nov-33 | 3.00 | 21,100 | 3.52 | 0.23 | 0.10 | 3.54 | 3.40 |
| 21-May-34 | 3.75 | 17,400 | 3.54 | 0.22 | 0.10 | 3.56 | 3.42 |
| 21-Dec-34 | 3.50 | 14,000 | 3.58 | 3.58 | 3.58 | 3.60 | 0.00 |
| 21-Jun-35 | 2.75 | 10,850 | 3.62 | 0.22 | 0.09 | 3.64 | 3.50 |
| 21-Apr-37 | 3.75 | 12,300 | 3.73 | 0.22 | 0.08 | 3.75 | 3.61 |
| 21-Jun-39 | 3.25 | 10,300 | 3.84 | 0.21 | 0.07 | 3.86 | 3.73 |
| 21-May-41 | 2.75 | 13,800 | 3.91 | 0.20 | 0.06 | 3.93 | 3.80 |
| 21-Mar-47 | 3.00 | 14,200 | 3.96 | 0.18 | 0.06 | 3.99 | 3.95 |
| 21-Jun-51 | 1.75 | 19,000 | 3.98 | 0.19 | 0.10 | 4.00 | 3.88 |