Summary: ACGB bond yields fall in Australia; ACGB 10-year spread to US Treasury yield rises to -8bps; 10-year bond yields down in US, major European markets; $2.8 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields started the week with a modest decline. Yields then fell each day with the exception of a midweek jump which was then reversed over the remainder of the week. By this point, the 3-year ACGB yield had lost 10bps to 4.03%, the 10-year yield had shed 11bps to 4.43% while the 20-year yield finished 7bps lower at 4.73%. The spread between US and Australian 10-year Treasury bond yields rose from -12bps to -8bps.
Over in the US, 10-year bond yields fell every day with the exception of Tuesday.
The latest reading of The Conference Board’s Consumer Confidence Index came out on Tuesday. Confidence deteriorated In April, with the index now back to the long-term average.
March’s JOLTS report was released the next day. Total quits, separations and openings all decreased and the quit rate ticked down from 2.2% to 2.1%.
The ISM’s April reading of its PMI came out that same day. At 49.2, it was below expectations and back in contractionary territory.
At the end of the week, April’s non-farm payrolls report produced a rise in employment below expectations. The jobless rate ticked up from 3.8% to 3.9% and the participation rate remained steady at 62.7%.
The ISM’s April Services PMI was also released, with a fall in the index from 51.4 to 49.4, below expectations.
The US Fed’s Nowcast model was updated as usual at the end of the week. The June 2024 quarter forecast was lowered from 2.7% (annualised) to 2.2%.
By this point, the US 2-year Treasury bond yield had lost 17bps to 4.82%, the 10-year yield had shed 15bps to 4.51% while the 30-year yield finished 10bps lower at 4.67%.
In major euro-zone markets, 10-year bond yields followed a similar pattern to their US counterpart except they were closed midweek.
The “flash” April consumer price index (CPI) report was released on Tuesday. It produced an annual inflation rate of 2.4% in the euro-zone, in line with expectations. Annual core CPI slowed from 2.9% to 2.7%.
March quarter GDP figures were released at the same time. The euro-zone economy expanded by 0.3%, more than expected. The annual growth rate accelerated from 0.1% to 0.4%.
By the end of the week, the German 10-year bund yield had shed 8bps to 2.49% while the French 10-year OAT yield had lost 7bps to 2.99%. The Italian 10-year BTP yield lost 10bps to 3.79% over the week while the British 10-year gilt yield finished 11bps lower at 4.32%.
The AOFM held one bond tender this week; $800 million of May 2034s were issued at a yield of 4.47%. 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 $36.75 billion. There are currently $823.85 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 $30.00 billion of short-term Treasury notes outstanding.