AUCTION PREVIEW: '27 Inflation Supply Due Up

The Australian Office of Financial Management (AOFM) will today sell A$100mn of the 0.75% 21 November 2027 I/L Bond, issue #CAIN414. The line was last sold on 14 July 2020 for A$150mn. The sale drew an average yield of -0.1840%, at a high yield of -0.1825% and was covered 4.0667x. There were 34 bidders, 4 of which were successful and 2 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 68.2%.

• The auction is overshadowed by the syndication of the new ACGB Nov '31, which has been launched and will price tomorrow.
• Breakevens have moved sharply away from their lows, owing to expectations re: accommodative monetary policy for some time to come across the globe.
• Eyes will be on the Fed's annual Jackson Hole symposium as the market looks for more colour re: the central bank's monetary policy review, with any details having the potential to impact broader financial markets.
• Still, the domestic inflationary impulse in Australia is expected to be fairly sedate for some time to come, given the global backdrop and weakening domestic wage growth.
• Results due at 0200BST/1100AEST.