‌AUCTION‌ ‌PREVIEW:‌ ACGB Nov '24 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$2.5bn of the 0.25% 21 November 2024 Bond, issue #TB159. The line was last sold on 16 October 2020 for A$1.0bn. The sale drew an average yield of 0.1895%, at a high yield of 0.1900% and was covered 7.0100x. There were 42 bidders, 9 of which were successful and 3 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 93.8%.

• This represents the only round of ACGB issuance this week, presenting a digestible level of DV01, in terms of singular issuance and for the week as a whole.
• Still, murmurs re: the future path of RBA policy have been doing the rounds over the last week or so, given the strength of the Australian economic recovery. The line currently offers attractive rolldown to ACGB Apr '24, although much of that strategy is predicated on the notion of a smooth continuation of YCC. The bond's location on the curve means that it could become subjected to increased volatility if speculation re: the longevity of the Bank's commitment to another 3 years of loose policy picks up.
• Still, that seems to be a matter for down the road, with the abundant levels of cash lodged at the RBA in the form of E/S surplus and aforementioned roll down set to support demand at today's auction, in the view of several desks.
• Results due at 0000GMT/1100AEDT.