Summary: ACGB yields down in Australia; ACGB 10-year spread to US Treasury yield rises to +18bps; 10-year bond yields down in US, major European markets; $3.2 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields started with a moderate rise before falling through the remaining days of the week. By the end of it, the 3-year ACGB yield had lost 5bps to 3.49%, the 10-year yield had shed 8bps to 3.89% while the 20-year yields finished 4bps lower at 4.32%. The spread between US and Australian 10-year Treasury bond yields increased from +7bps to +18bps.
Over in the US, 10-year bond yields followed the same pattern.
The ISM’s August reading of its manufacturing PMI was the first major piece of economic data and it came out on Tuesday. The index recovered slightly but remains below 50.
July’s JOLTS report was released the next day. Quits and separations increased while openings declined. The quit rate ticked up to 2.1% after June’s quit rate was revised down to 2.0%.
The ISM’s August reading of its non-manufacturing PMI was released on Thursday. The index crept up from 51.4 to 51.5, essentially in line with the generally expected figure.
At the end of the week, August’s non-farm payrolls report produced a rise in employment below expectations. The participation rate remained unchanged while jobless rate ticked down to 4.2%.
The New York Fed’s Nowcast model was also updated as usual. The September 2024 quarter forecast was raised from 2.5% (annualised) to 2.6% and the December 2024 forecast was raised from 2.1% to 2.2%.
By this point, the US 2-year Treasury bond yield had shed 26bps to 3.65% the 10-year yield had lost 19bps to 3.71% while the 30-year yields finished 17bps lower at 4.02%.
In major euro-zone markets, 10-year bond yields moved in a fairly-similar fashion to their US in a week with little notable European data.
By the end of the week, German and French 10-year bond yields had both lost 13bps to 2.17% and 2.88% respectively. The Italian 10-year BTP yield also shed 13bps to 3.55% over the week while the British 10-year gilt yield finished 12bps lower at 3.97%.
The AOFM held just the one bond tender this week, with $1.2 billion of December 2035s priced at a nominal yield of 3.99%. 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 2024/2025 financial year (not taking into account short-term Treasury note tenders) is $25.10 billion. There are currently $862.55 billion of Treasury bonds and $41.385 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.