Summary: 10-year bond yield down in Australia; ACGB 10-year spread to US Treasury yield falls to -1bp; 10-year bond yields up in US, major European markets; $2.8 billion of bonds, notes issued by AOFM.
Locally, long-term ACGB yields fell over the first four days of the week before rising noticeably at the end of the week. By this point, the 3-year ACGB yield had lost 5bps to 4.25%, the 10-year yield had shed 11bps to 4.63% while the 20-year yield finished 10bps lower at 4.94%. The spread between US and Australian 10-year Treasury bond yields fell back from +22bps to -1bp.
Over in the US, 10-year bond yields rose significantly at the start of the week before dropping noticeably over the next two days. Thursday’s rise matched that of Monday but Friday’s increase was just a modest one.
It was a quiet week in the US for economic data.
The latest reading of the University of Michigan’s Consumer Sentiment index came out at the end of the week. Sentiment deteriorated for a fourth consecutive month, with young respondents and those on lower incomes the most pessimistic.
The US Fed’s Nowcast model was updated as usual. The December quarter GDP growth forecast was raised to 2.5% annualised, or a 0.6% expansion over the quarter.
By this point, the US 2-year Treasury bond yield had gained 18bps to 5.05%, the 10-year yield had added 12bps to 4.64% while the 30-year yield finished 6bps higher at 4.76%.
In major euro-zone markets, 10-year bond yields moved broadly in line with their US counterpart.
By the end of the week, the German 10-year bund yield had gained 7bps to 2.71% and the French 10-year OAT yield had added 6bps to 3.29%. The Italian 10-year BTP yield increased by 12bps over the week to 4.56% while the British 10-year gilt yield finished 4bps higher at 4.50%.
The AOFM held one bond tender this week; $800 million of June 2035s were priced at a nominal yield of 4.64%. 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 $21.35 billion. There are currently $844.35 billion of Treasury bonds and $40.286 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 $27.00 billion of short-term Treasury notes outstanding.
AUSTRALIAN GOVERNMENT BONDS
| MATURITY | COUPON (%) | ISSUE SIZE ($M) | CLOSING YIELD | Δ WEEK | Δ MONTH | WEEK HIGH | WEEK LOW |
|---|---|---|---|---|---|---|---|
| 21-Apr-24 | 2.75 | 35,900 | 4.41 | 0.02 | 0.21 | 4.43 | 4.38 |
| 21-Nov-24 | 0.25 | 41,300 | 4.41 | -0.07 | 0.19 | 4.47 | 4.38 |
| 21-Apr-25 | 3.25 | 41,500 | 4.38 | -0.03 | 0.20 | 4.42 | 4.31 |
| 21-Nov-25 | 0.25 | 39,200 | 4.30 | -0.04 | 0.22 | 4.34 | 4.22 |
| 21-Apr-26 | 4.25 | 39,600 | 4.24 | -0.05 | 0.16 | 4.28 | 4.16 |
| 21-Sep-26 | 0.5 | 38,600 | 4.24 | -0.04 | 0.16 | 4.27 | 4.15 |
| 21-Apr-27 | 4.75 | 36,700 | 4.24 | -0.05 | 0.15 | 4.28 | 4.16 |
| 21-Nov-27 | 2.75 | 32,200 | 4.26 | -0.06 | 0.16 | 4.31 | 4.18 |
| 21-May-28 | 2.25 | 31,700 | 4.27 | -0.07 | 0.16 | 4.34 | 4.19 |
| 21-Nov-28 | 2.75 | 34,800 | 4.30 | -0.07 | 0.16 | 4.37 | 4.22 |
| 21-Apr-29 | 3.25 | 36,600 | 4.34 | -0.07 | 0.16 | 4.40 | 4.26 |
| 21-Nov-29 | 2.75 | 34,700 | 4.39 | -0.07 | 0.16 | 4.45 | 4.30 |
| 21-May-30 | 2.5 | 37,100 | 4.43 | -0.08 | 0.15 | 4.51 | 4.35 |
| 21-Dec-30 | 1 | 38,700 | 4.48 | -0.09 | 0.14 | 4.56 | 4.40 |
| 21-Jun-31 | 1.5 | 38,100 | 4.52 | -0.09 | 0.14 | 4.60 | 4.43 |
| 21-Nov-31 | 1 | 21,000 | 4.55 | -0.09 | 0.14 | 4.64 | 4.46 |
| 21-May-32 | 1.25 | 39,300 | 4.58 | -0.09 | 0.14 | 4.67 | 4.49 |
| 21-Nov-32 | 1.75 | 29,000 | 4.60 | -0.10 | 0.14 | 4.70 | 4.51 |
| 21-Apr-33 | 4.5 | 25,900 | 4.60 | -0.10 | 0.14 | 4.70 | 4.51 |
| 21-Nov-33 | 3 | 22,500 | 4.62 | -0.10 | 0.13 | 4.72 | 4.53 |
| 21-May-34 | 3.75 | 18,800 | 4.63 | -0.10 | 0.13 | 4.73 | 4.54 |
| 21-Dec-34 | 3.5 | 17,000 | 4.65 | -0.11 | 0.14 | 4.76 | 4.56 |
| 21-Jun-35 | 2.75 | 14,650 | 4.67 | -0.11 | 0.13 | 4.78 | 4.59 |
| 21-Apr-37 | 3.75 | 12,300 | 4.76 | -0.10 | 0.13 | 4.86 | 4.66 |
| 21-Jun-39 | 3.25 | 10,300 | 4.86 | -0.10 | 0.14 | 4.96 | 4.76 |
| 21-May-41 | 2.75 | 14,300 | 4.93 | -0.10 | 0.15 | 5.03 | 4.84 |
| 21-Mar-47 | 3 | 14,200 | 4.99 | -0.09 | 0.14 | 5.09 | 4.89 |
| 21-Jun-51 | 1.75 | 19,600 | 4.97 | -0.09 | 0.12 | 5.07 | 4.88 |