Summary: ACGB bond yields down in Australia; ACGB 10-year spread to US Treasury yield rises to -15bps; 10-year bond yields down in US, major European markets; $2.8 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields fell each day except for Thursday when February employment figures were released. By the end of the week, the 3-year ACGB yield had shed 13bps to 3.62%, the 10-year yield had lost 10bps to 4.05% while the 20-year yield finished 9bps lower at 4.36%. The spread between US and Australian 10-year Treasury bond yields inched up from -16bps to -15bps.
Over in the US, 10-year bond yields rose on most days of the week.
The first major event came midweek with the end of the latest FOMC meeting. The target range for the federal funds rate was left unchanged and the accompanying statement was barely amended.
The Conference Board’s February reading of its Leading Index posted a 0.1% rise the next day, a surprise result given the number of negative months which had preceded it.
S&P Glolal Market Intelligence’s latest flash reading of its US composite index came out on the same day, posting modest decline from 52.5 in February to 52.2. The manufacturing index increased from 52.2 to 52.5 while the services index declined by 0.6 to 51.7.
The US Fed’s Nowcast model was updated as usual at the end of the week. The March 2024 quarter forecast was raised from 1.8% (annualised) to 1.9% while the June quarter forecast was raised from 2.1% to 2.2%.
By this stage, the US 2-year Treasury bond yield had shed 14bps to 4.59%, the 10-year yield had lost 11bps to 4.20% while the 30-year yield finished 6bps lower at 4.37%.
In major euro-zone markets, 10-year bond yields followed a similar pattern to their US counterpart.
March’s consumer sentiment report was released midweek. The index indicated euro-zone sentiment had improved again, although the index is still substantially below its long-term average.
S&P Global Market Intelligence released its March flash PMI figures for the euro-zone on Thursday. The preliminary reading of the composite index was 49.9, up from February’s final reading of 49.2.
Germany’s ifo Institute released the March reading of its business climate index at the end of the week. The index increased as firms’ views of current conditions and the short-term outlook both improved.
By this stage, the German 10-year bund yield had shed 12bps to 2.32% while the French 10-year OAT yield had lost 8bps to 2.79%. The Italian 10-year BTP yield fell by 6bps to 3.63% over the week while the British 10-year gilt yield finished 17bps lower at 4.03%.
The AOFM held one bond tender this week; $800 million worth of June 2035s were issued at a yield of 4.12%. There were the usual 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 buy-backs or short-term Treasury note tenders) is $32.20 billion. There are currently $855.45 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 $26.00 billion of short-term Treasury notes outstanding.