AUCTION PREVIEW: Target vs. Rolldown

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 0.25% 21 November 2024 Bond, issue #TB159. The line was last sold on 18 September 2020 for A$2.0bn. The sale drew an average yield of 0.3070%, at a high yield of 0.3075% and was covered 6.5405x. There were 60 bidders, 10 of which were successful and 5 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 99.0%.

• We should expect yesterday's rhetoric from RBA Governor Lowe to provide at least a solid level of support at today's auction, with the prospect of further easing (most pertinently for this auction, a lower 3-Year yield target) elevated, although a focus on rolldown plays on the potential for the RBA to extend its purchase focus into the 5-10 Year sector may provide some counter, with the line's outright yield sitting at ~0.15% at typing.
• ASWs have moved back from elevated levels in recent weeks.
• Results due at 0100BST/1100AEDT.