Summary: ACGB yields up in Australia; ACGB 10-year spread to US Treasury yield rises to 28bps; 10-year bond yields down in US, major European markets; $1.5 billion of bonds issued by AOFM.
Locally, long-term ACGB yields moved higher each day, usually in a fairly modest fashion, the exception being at the end of the week when yields fell. By this point, 3-year and 10-year ACGB yields had both gained 4bps to 4.08% and 4.59% respectively while the 20-year yield finished 2bps higher at 4.91%. The spread between US and Australian 10-year Treasury bond yields increased from 16bps to 28bps.
Over in the US, 10-year bond yields experienced a quite volatile week even though there was little data. There was, however, a presidential election on Tuesday.
The FOMC cut its federal funds rate target by 25bps on Thursday, as largely expected.
The University of Michigan’s November reading of its consumer sentiment index came out at the end of the week. The index rose by good amount, above expectations, but it remains at a, subdued level from a historical perspective. Short-term inflation expectations eased from 2.7% to 2.6%.
The New York Fed’s Nowcast model was also updated at the end of the week as usual. The December 2024 quarter forecast was raised from 2.0% (annualised) to 2.1%.
By this stage, the US 2-year Treasury bond yield had gained 4bps to 4.26%, the 10-year yield had lost 8bps to 4.31% while the 30-year yield finished 11bps lower at 4.47%.
In major euro-zone markets, 10-year bond yields see-sawed moderately throughout the week.
By the end of the week, the German 10-year bond yield had lost 4bps to 2.37% while the French 10-year OAT had slipped 2bps to 3.13%. The Italian 10-year BTP yield lost 2bps to 3.66% over the week while the British 10-year gilt yield finished 1bp lower at 4.50%.
The AOFM held two vanilla bond tenders this week. $700 million of November 2027s and $800 million of June 2035s were priced at nominal yields of 4.03% and 4.59% respectively. 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 $38.75 billion. There are currently $875.85 billion of Treasury bonds and $41.735 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 $28.00 billion of short-term Treasury notes outstanding.