AUCTION PREVIEW: Sep-30 Index-Linked Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$100mn of the 2.50% 20 September 2030, issue #CAIN408. The line was last sold on 28 September 2021 for A$100mn. The sale drew an average yield of -0.6526%, at a high yield of -0.6450% and was covered 3.0600x. There were 28 bidders, 10 of which were successful and 7 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 57.7%.

• 10-Year breakeven inflation expectations are seemingly entrenched around the 2.50% level. This suggests that the market believes that the RBA will do what is needed to keep inflation around the middle of its 2-3% target band, even though the Bank has flagged a desire to generate sustainable inflation in the upper half of its target.
• We would expect smooth passage when it comes to this auction, given the current fears re: wider spread inflation and general demand for protection against spiralling living costs.
• Results due at 0000GMT/1100AEDT.