NAB On Recent Tweaks To RBA Semi Purchases

NAB note that "this week's RBA post meeting statement has focused investors on the July Board meeting where the Bank has said it will "consider whether to retain the April 2024 bond as the target bond" for YCC but it will also consider "future bond purchases following the completion of the second A$100 billion of purchases". In the background though, the RBA continues to tweak its purchases of semi-government paper. The first change, which was made some week's back, was to shift from buying short dated semi paper one week and long the next to the RBA offering to buy semis across the targeted purchase maturities each week. Yesterday, the RBA made another, more subtle change. Previously its buybacks were typically A$450m across NSWTC and TCV, A$450mnn across QTC and WATC and A$100m across NTTC, SAFA, ACT and Tas. Yesterday it altered the buybacks to A$460mn across NSWTC and TCV, A$410mn across QTC and WATC and A$130mn across NTTC, SAFA, ACT and Tas. It has not been confirmed as to why the RBA made this change, but we note that when the RBA begun the QE program it said that the allocation of semi buying "will also be guided by the stock of debt outstanding". Focusing just on benchmark outstandings and QE buying (i.e. excluding market dysfunction buying) we estimated that the RBA is over-allocated on QTC and WATC. The largest under-allocation being NSWTC and SAFA."