ACGB Apr-33 Supply Goes Smoothly But Lower Demand Seen

The latest round of ACGB Apr-33 supply proceeded smoothly with pricing through mids (weighted average yield was 0.57bp through prevailing mids, per Yieldbroker).

• However, the auction had a cover ratio of 3.700x, which failed to reach the level of the previous auction held on 3 May despite the smaller size of issuance today (A$700mn vs. A$800mn previously).
• As highlighted in the auction preview, a higher outright yield and a more sanguine post-CPI view of the RBA policy outlook appear to have been able to offset concerns regarding the flatness of the yield curve.
• There has been little movement in cash trading of the line after the auction result. XMU3 is also unchanged post-auction.
• However, it's worth noting that liquidity could be impacted by the timing of the BoJ policy decision and the release of US PCE and ECI data later today.