Back From Sydney Peak

The space has looked through next week’s atypical AOFM issuance slate. All of next week’s AOFM issuance will take place Wednesday through Friday, with the delivery of the Federal Budget (on Tuesday) likely prohibiting a Monday auction (note that the “Monday effect” can result in weaker auctions owing to lower liquidity in wider financial markets at that time of the week, in addition to less time for desks to prepare for the issuance. The proximity of Monday to the Budget could have exacerbated the trend. Resulting in the AOFM holding off on Monday issuance).

• In terms of the bonds that will be auctioned, the AOFM has gone for a barbell approach, offering the shortest and longest (ACGB Apr-24 & ACGB Jun-51) ACGBs that fall within its currently tendered lines (shorter bonds haven’t been tendered for some time, as per the usual AOFM approach in the maturity cycle). The notional ACGB value on offer next week is a little lower than the “normal” A$2.0-2.5bn, sitting at A$1.8bn, with note issuance also ticking down to A$2.0bn on the week.
• YM last -1.5 & XM -2.0, with the space back from best levels after being supported by the previously outlined firm round of ACGB Nov-24 supply and some modest regional demand for U.S. Tsys during early Asia-Pac dealing.