AUCTION PREVIEW: ACGB June-35 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 2.75% 21 May 2034 bond. The line was last sold on 20 March 2024 for A$800bn. The last sale drew an average yield of 4.1222%, at a high yield of 4.1225% and was covered 2.8437x. There were 43 bidders, 15 of which were successful and 3 were allocated in full.

• This week's ACGB supply is consistent with budget forecasts, issuance of Treasury Bonds (including Green Treasury Bonds) in 2024-25 is expected to be around $90 billion, with A$50bn of Treasury Bond issuance is planned for 2023-24 (of which $36.7bn has been completed as of the 10th May).
• The bidding at today’s auction is likely to be influenced by several factors. The outright yield is around 17bps higher than the early March auction level but still around 63bps lower than the November high. The 2/10 yield curve, is around 6bp steeper since the March print but 23bps flatter than the late October high.
• RBA-dated OIS is currently pricing a 13.5% chance of a hike by November, down from 40% pre-RBA last week.
• Results are due at 0200 BST / 1100AEST.