Summary: ACGB bond yields up in Australia; ACGB 10-year spread to US Treasury yield falls to –29bps; 10-year bond yields up in US, major European markets; $3.1 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields rose each day of the shortened week with the exception of Friday. By this point, the 3-year ACGB yield had added 8bps to 3.65%, the 10-year yield had gained 11bps to 4.11% while the 20-year yield finished 14bps higher at 4.42%. The spread between US and Australian 10-year Treasury bond yields moved from –20bps to –29bps.
Over in the US, 10-year bond yields rose sharply on Easter Monday, a bit more the next day, then fell back somewhat until Friday when yields moved noticeably higher again.
The ISM’s March reading of its PMI came out at the start of the week. At 50.3, it was above expectations and back in expansionary territory.
February’s JOLTS report was released the next day. Total quits, separations and openings all increased and the quit rate stayed steady at 2.2%.
At the end of the week, March’s non-farm payrolls report produced a rise in employment in excess of expectations for second consecutive month. The jobless rate ticked down from 3.9% to 3.8%, even as the participation rate rose from 62.5% to 62.7%.
The US Fed’s Nowcast model was updated as usual. The March 2024 quarter forecast was raised from 1.9% (annualised) to 2.3% while the June quarter forecast was raised from 2.2% to 2.6%.
By this point, the US 2-year Treasury bond yield had added 13bps to 4.75%, the 10-year yield had gained 20bps to 4.40% while the 30-year yield finished 21bps higher at 4.55%.
In major euro-zone markets, 10-year bond yields followed broadly-similar patterns to their US counterpart.
The only economic report of note came out midweek. The “flash” March consumer price index (CPI) report produced an annual inflation rate of 2.4% for the euro-zone, slightly below expectations. Annual core CPI slowed from 3.1% to 2.9%.
By the end of the week, the German 10-year bund yield had added 10bps to 2.40% while the French 10-year OAT yield had gained 11bps to 2.91%. The Italian 10-year BTP yield gained 13bps to 3.79% over the week while the British 10-year gilt yield finished 15bps higher at 4.18%.
The AOFM held two bond tenders this week; $800 million of May 2041s and $800 million worth of May 2030s were issued at respective yields of 4.39% and 3.84%. There were the usual two Treasury note tenders as well 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 $33.55 billion. There are currently $856.55 billion of Treasury bonds and $40.435 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 $30.00 billion of short-term Treasury notes outstanding.