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AUCTION PREVIEW: Nov-32 Indexed Supply Due

AUSSIE BONDS

The Australian Office of Financial Management (AOFM) will today sell A$100mn of the

0.25% 21 November 2032 Indexed Bond, issue #CAIN416. The line was last sold on 23 August 2022 for A$150mn. The sale drew an average yield of 1.1866%, at a high yield of 1.2000% and was covered 2.5600x. There were 36 bidders, 14 of which were successful, and 11 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 64.0%.

  • 10-Year breakevens now operate around 2.10%, comfortably within the lower half of the RBA’s target band. This comes after the metric peaked at ~2.80% back in May.
  • The pullback in breakevens gives a more attractive entry point for those worried that elevated inflation levels will become more embedded.
  • The shift higher in market pricing of terminal rates for the major global central banks has been a key driver of the pull lower in breakevens, alongside a fall in global commodity prices and worry surrounding an economic hard landing.
  • Ultimately, the ongoing inflationary pressures and pullback in breakevens should facilitate smooth takedown of today’s auction.
  • Results are due at 0200BST/1100AEST.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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