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The AOFM will today auction A$700mln...>

AUSSIE BONDS
AUSSIE BONDS: The AOFM will today auction A$700mln of 2.25% May 2028 bonds,
issue #TB149. The paper is one of the reference bonds for the 10-Year future.
The issue has A$17.6bln outstanding with a modified duration of 9.47 years. The
line was last sold on June 16 for A$800mln. The auction drew an average yield of
2.4988%, a high yield of 2.50%, covered 3.2563x. In the secondary market the
issue yields 2.732%, flat on the day.
- The RBA reiterated their dovish stance last week in the face of hawkish
expectations from markets in the face of a hawkish bias adopted by global
central banks. This has seen Aussie bonds outperform their US equivalents and
the AU/US 10-Year spread has narrowed slightly to 39.2bp last from 47bp at the
start of the week. At this level is still offers concession compared to the
previous auction when the spread sat at 22.8bp. Spreads will likely widen going
forward after the FOMC said that balance sheet reinvestment would begin
"relatively soon" and the RBA in no rush to tighten, something markets seem more
convinced of with the Aussie bank bill curve rising in the wake of comments from
RBA's Lowe and Debelle. Results due at 0200BST/1100AEST.

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