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ACGB Nov-31 Supply Prices Well; Cover Weakens

AUSSIE BONDS

The latest round of ACGB Nov-31 supply went well on the pricing side, with the weighted average yield printing 0.97bp through prevailing mids (per Yieldbroker estimates), while the cover ratio slipped further to 2.28x (from 2.67x previously), well below the six-auction average at 3.55x.

  • As mentioned in our preview, uncertainty surrounding the RBA likely kept overseas investors sidelined, limiting overall demand at the auction. Relative value of the line against 3s was also noted to have been limited due to the flatness of the curve, with the 10-Year zone of the curve observed to be operating towards the richer end of the YtD range on the 5-/10-/15-Year butterfly, another negative.
  • Aussie bonds have edged lower in the wake of the auction, with cash ACGBs running 1.5-5.0bp cheaper across the curve, bear flattening.
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The latest round of ACGB Nov-31 supply went well on the pricing side, with the weighted average yield printing 0.97bp through prevailing mids (per Yieldbroker estimates), while the cover ratio slipped further to 2.28x (from 2.67x previously), well below the six-auction average at 3.55x.

  • As mentioned in our preview, uncertainty surrounding the RBA likely kept overseas investors sidelined, limiting overall demand at the auction. Relative value of the line against 3s was also noted to have been limited due to the flatness of the curve, with the 10-Year zone of the curve observed to be operating towards the richer end of the YtD range on the 5-/10-/15-Year butterfly, another negative.
  • Aussie bonds have edged lower in the wake of the auction, with cash ACGBs running 1.5-5.0bp cheaper across the curve, bear flattening.