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ACGB May-34 Auction Goes Smoothly With More Demand Present

AUSSIE BONDS

Expectations of sustained strong pricing at today's auction proved accurate, as the weighted average yield printed 0.64bps through prevailing mids (per Yieldbroker) and the cover ratio moved higher to 3.9813x from 3.6437x at the March auction.

  • An elevated outright yield, a low level of issuance, and the line’s inclusion in the XM basket all look to have contributed to today’s bidding.
  • The level of demand at today's auction didn't appear materially impacted by a less sanguine view towards the RBA's policy outlook following Q1 CPI data and the recent souring in the sentiment towards longer-dated bonds globally.
  • The ACGB May-34 cash trade is 1bp cheaper in post-auction dealings, with XM slightly weaker.

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