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AUSSIE BONDS
The curve has continued to flatten, as Aussie bonds benefit from the better bid evident in U.S. Tsys, with Asia-Pac participants reacting to developments seen in NY hours on Tuesday. YM sits unchanged on the day, while XM is +2.5.
- Looking at FX hedged yields from the perspective of Japanese investors, it is worth pointing out that 10-Year ACGBs failed to get real traction above the 1.00% threshold and have since backed off. Japanese investors may have played a part in the pullback, if they did indeed show interest around the psychological level (which represents a near 100bp pickup vs. 10-Year JGBs and was a level not seen since '14).
Fig.1: 10-Year ACGB Yields From The Perspective Of a Japanese FX-Hedged Investor (Using Annualised 3-Month Hedging Costs)
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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