Government

Summary: 10-year bond yield up in Australia; ACGB 10-year spread to US Treasury yield falls to -19bps; 10-year bond yields up in US, major European markets; $2.70 billion of bonds, notes issued by AOFM.

Locally, long-term ACGB yields rose through the week before falling back on Friday. By this point, the 3-year ACGB yield had gained 6bps to 3.78% while 10-year and 20-year yields both finished 8bps higher at 4.08% and 4.43% respectively.  The spread between US and Australian 10-year Treasury bond yields decreased from -18bps to -19bps.

Over in the US, 10-year bond yields rose through most of the shortened week, with Thursday being the exception.

One of the few reports of note came midweek. The ISM’s August Services PMI rose from 52.7 to 54.5, above expectations.

The Atlanta Fed’s Nowcast model was updated at the end of the week. Its September quarter GDP growth estimate was raised to 5.6% annualised, or a 1.4% expansion over the quarter.

By this point, the US 2-year Treasury bond yield had gained 10bps to 4.97%, the 10-year yield had added 9bps to 4.27% while the 30-year yield finished 4bps higher at 4.34%.

In major euro-zone markets, 10-year bond yields followed a similar path to their US counterpart.

By the end of the week, the German 10-year bund yield had added 6bps to 2.61% and the French 10-year OAT yield had gained 7bps to 3.13%.  The Italian 10-year BTP yield increased by 11bps over the week to 4.33% while the British 10-year gilt yield finished 1bp higher at 4.53%.

The AOFM held one bond tender during the week; $700 million of December 2034s were priced at a nominal yield of 4.20%. 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 buy-backs or short-term Treasury note tenders) is $7.35 billion. There are currently $830.75 billion of Treasury bonds and $39.886 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 after $5.50 billion matured on Friday.

AUSTRALIAN GOVERNMENT BONDS

MATURITY	COUPON (%)	ISSUE SIZE ($M)	CLOSING YIELD	Δ WEEK	Δ MONTH	WEEK HIGH	WEEK LOW
21-Apr-24	2.75	35,900	4.02	0.01	-0.07	4.06	4.02
21-Nov-24	0.25	41,300	4.01	0.05	-0.07	4.04	3.99
21-Apr-25	3.25	41,500	3.90	0.04	-0.09	3.95	3.90
21-Nov-25	0.25	39,200	3.81	0.03	-0.11	3.87	3.81
21-Apr-26	4.25	39,600	3.78	0.05	-0.11	3.84	3.78
21-Sep-26	0.5	37,800	3.78	0.06	-0.09	3.84	3.78
21-Apr-27	4.75	36,700	3.78	0.06	-0.09	3.84	3.78
21-Nov-27	2.75	31,400	3.79	0.06	-0.08	3.85	3.79
21-May-28	2.25	30,900	3.80	0.06	-0.09	3.87	3.80
21-Nov-28	2.75	34,800	3.83	0.06	-0.09	3.89	3.83
21-Apr-29	3.25	36,600	3.86	0.05	-0.10	3.92	3.86
21-Nov-29	2.75	34,700	3.89	0.06	-0.10	3.97	3.89
21-May-30	2.5	37,100	3.93	0.06	-0.11	4.00	3.93
21-Dec-30	1	38,700	3.98	0.07	-0.11	4.05	3.98
21-Jun-31	1.5	38,100	4.00	0.07	-0.11	4.08	4.00
21-Nov-31	1	21,000	4.03	0.07	-0.11	4.10	4.03
21-May-32	1.25	39,300	4.05	0.08	-0.11	4.13	4.05
21-Nov-32	1.75	29,000	4.07	0.08	-0.11	4.15	4.07
21-Apr-33	4.5	25,100	4.07	0.08	-0.11	4.14	4.07
21-Nov-33	3	22,500	4.08	0.08	-0.11	4.16	4.08
21-May-34	3.75	18,800	4.09	0.08	-0.11	4.17	4.09
21-Dec-34	3.5	17,000	4.12	0.08	-0.11	4.19	4.12
21-Jun-35	2.75	12,250	4.14	0.07	-0.12	4.22	4.14
21-Apr-37	3.75	12,300	4.23	0.07	-0.11	4.30	4.23
21-Jun-39	3.25	10,300	4.33	0.07	-0.10	4.40	4.33
21-May-41	2.75	14,300	4.40	0.07	-0.09	4.46	4.40
21-Mar-47	3	14,200	4.47	0.08	-0.09	4.52	4.47
21-Jun-51	1.75	19,600	4.48	0.08	-0.08	4.52	4.48