Summary: ACGB bond yields down in Australia; ACGB 10-year spread to US Treasury yield falls to -20bps; 10-year bond yields generally steady in US, major European markets; $2.8 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields fell each day of the shortened week with the exception of Tuesday. By the end of the week, 3-year and 10-year ACGB yields had both lost 5bps to 3.57% and 4.00% respectively while the 20-year yield finished 8bps lower at 4.28%. The spread between US and Australian 10-year Treasury bond yields moved -15bps to -20bps.
Over in the US, 10-year bond yields rose moderately at the start of the week, fell back over the next two days and then rose a touch on Thursday.
The latest reading of The Conference Board’s Consumer Confidence Index came out on Tuesday. Confidence slipped a little in March with the index posting a less-than-expected reading.
The latest report on personal consumption expenditures was released at the end of the week. Core PCE price inflation increased by 0.3% in February and by 2.8% on an annual basis, slightly slower than January’s revised rate of 2.9%.
The US Fed’s Nowcast model was updated as usual. The March 2024 quarter forecast remained unchanged at 1.9% (annualised) while the June quarter forecast likewise remained at 2.2%.
By this point, the US 2-year Treasury bond yield had added 3bps to 4.62%, the 10-year yield had returned to its starting point at 4.20% while the 30-year yield finished 3bps lower at 4.34%.
In major euro-zone markets, 10-year bond yields followed a similar pattern to their US counterpart.
The only economic report of note came out midweek. The latest reading of the euro-zone’s Economic Sentiment Indicator (ESI) increased in March but remains well under its long-term average. This indicator has a solid correlation with euro-zone GDP and it implied a year-to-March growth rate of 0.5%, up from 0.3% in January.
By the end of the week, the German 10-year bund yield had lost 2bps to 2.30% while the French 10-year OAT yield had added 1bp to 2.80%. The Italian 10-year BTP yield gained 3bps to 3.66% over the week while the British 10-year gilt yield finished steady at 4.03%.
The AOFM held one bond tender this week; $800 million worth of April 2033s were issued at a yield of 4.01%. 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 buy-backs or short-term Treasury note tenders) is $33.00 billion. There are currently $854.45 billion of Treasury bonds and $40.986 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 $28.00 billion of short-term Treasury notes outstanding.