Summary: ACGB bond yields fall in Australia; ACGB 10-year spread to US Treasury yield falls to -17bps; 10-year bond yields down a touch in US, up a little in major European markets; $2.8 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields fell all through the week with the exception of Thursday. By the end of the week, the 3-year ACGB yield had lost 7bps to 3.96% while 10-year and 20-year yields both finished 10bps lower at 4.33% and 4.63% respectively. The spread between US and Australian 10-year Treasury bond yields fell from -8bps to -17bps.
Over in the US, 10-year bond yields declined a little on Monday and then see-sawed over the remaining days of the week.
Data releases were few in number and the only particularly notable report came out at the end of the week. The University of Michigan’s May reading of its consumer sentiment index produced a markedly lower figure, well below expectations. Inflation expectations rose again.
The New York Fed’s Nowcast model was also updated as usual at the end of the week. The June 2024 quarter forecast remained unchanged at 2.2% (annualised).
By this point, the US 2-year Treasury bond yield had gained 5bps to 4.87%, the 10-year yield had slipped 1bp to 4.50% while the 30-year yield finished 3bps lower at 4.64%.
In major euro-zone markets, 10-year bond yields mostly followed a similar pattern to their US counterpart.
By the end of the week, the German 10-year bund yield had gained 3bps to 2.52% while the French 10-year OAT yield had added 1bp to 3.00%. The Italian 10-year BTP yield increased by 3bps to 3.82% over the week while the British 10-year gilt yield finished 6bps lower at 4.26%.
The AOFM held one bond tender this week; $800 million of April 2033s were issued at a yield of 3.95%. 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 short-term Treasury note tenders) is $37.55 billion. There are currently $824.65 billion of Treasury bonds and $40.435 billion of Treasury index-linked bonds on issue. The next series to mature does so on 21 November 2024 when $41.30 billion worth of bonds are due. There are also $27.00 billion of short-term Treasury notes outstanding.