AUCTION PREVIEW: Sep-30 I/L Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$150mn of the 2.50% 20 September 2030 Indexed Bond, issue #CAIN408: The line was last sold on 14 June 2022 for A$100mn. The sale drew an average yield of 1.4944%, at a high yield of 1.5200% and was covered 1.7600x. There were 42 bidders, 22 of which were successful and 20 was allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 72.7%.

• The underlying inflationary impulse evident at present, coupled with worries surrounding a higher potential peak/deeper entrenchment of inflation will likely underpin demand at today’s auction, resulting in smooth digestion of supply.
• This is despite breakevens moderating from their cycle peak, as markets show some faith that the RBA will be able to return inflation to target over the medium-term.
• Results due at 0000GMT/1100AEDT.