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AUSSIE BONDS: Supply Faces Higher Yield, Steeper Curve & RBA Easing Expns

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 2.50% 21 May 2030 Bond, issue #TB155. 

  • Today's auction bidding is expected to be shaped by multiple factors. The current yield is roughly 35bps lower than at the previous auction and about 75bps below the November 2023 high of 4.70%.
  • The 3/10 yield curve is around 15bps steeper than the previous outing and near its steepest level this year.
  • The line’s exclusion from the YM or XM baskets may weigh on demand but improving sentiment towards global bonds may assist.
  • Also on the positive side, market expectations for near term easing by the RBA have continued to firm. A 25bp rate cut is more than fully priced for April (133%), with the probability of a February cut at 90% (based on an effective cash rate of 4.34%).
  • While firm pricing is anticipated at the auction, these factors may limit the overall strength of bidding.
  • Results are due at 0000 GMT / 1100AEST.
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The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 2.50% 21 May 2030 Bond, issue #TB155. 

  • Today's auction bidding is expected to be shaped by multiple factors. The current yield is roughly 35bps lower than at the previous auction and about 75bps below the November 2023 high of 4.70%.
  • The 3/10 yield curve is around 15bps steeper than the previous outing and near its steepest level this year.
  • The line’s exclusion from the YM or XM baskets may weigh on demand but improving sentiment towards global bonds may assist.
  • Also on the positive side, market expectations for near term easing by the RBA have continued to firm. A 25bp rate cut is more than fully priced for April (133%), with the probability of a February cut at 90% (based on an effective cash rate of 4.34%).
  • While firm pricing is anticipated at the auction, these factors may limit the overall strength of bidding.
  • Results are due at 0000 GMT / 1100AEST.