Summary: ACGB bond yields barely change in Australia; ACGB 10-year spread to US Treasury yield falls to +13bps; 10-year bond yields up in US, major European markets; $3.5 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields declined most days, although yields lifted noticeably midweek. By the end of the week, the 3-year ACGB yield had slipped 1bp to 3.63%, the 10-year yield had added 1bp to 4.07% while the 20-year yield finished unchanged at 4.46%. The spread between US and Australian 10-year Treasury bond yields fell back +27bps to +13bps.
Over in the US, 10-year bond yields rose on each day of the week, although there was a moderate fall at the end of it.
The ISM’s July reading of its non-manufacturing PMI was released at the start of the week. The index rose from 48.8 to 51.4, essentially in line with the generally expected figure.
From there on, new economic data was thin on the ground and there was nothing of particular note until Friday when the New York Fed’s Nowcast model was updated as usual. The September 2024 quarter forecast was raised from 2.1% (annualised) to 2.2%.
By this point, the US 2-year Treasury bond yield had gained 17bps to 4.05%, the 10-year had added 15bps to 3.94% while the 30-year yield finished 11bps higher at 4.22%.
In major euro-zone markets, 10-year bond yields moved in a vaguely-similar fashion to their US counterpart in a week with few, if any, data updates.
By the end of the week, the German 10-year bund yield had gained 5bps to 2.23% while the French 10-year OAT yield had added 1bp to 2.97%. The Italian 10-year BTP yield also gained 1bp to 3.64% over the week while the British 10-year gilt yield finished 11bps higher at 4.05%.
The AOFM held two vanilla bond tenders this week. $800 million of June 2035s and $700 million April 2027s were priced at nominal yields of 4.12% and 3.66% respectively. The usual two Treasury note tenders also 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 $19.20 billion. There are currently $856.85 billion of Treasury bonds and $41.185 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 $27.00 billion of short-term Treasury notes outstanding.