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(M2) Correction Extends


Late Session Rebound


(M2) Corrective Cycle Remains In Play


(M2) Gains Still Considered Corrective

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AUSSIE BONDS: VIEW: ANZ notes that "the RBA opted not to purchases any bonds on
Thursday... The RBA will be encouraged by 3y yields staying within 1bp of the
0.25% target. Also encouraging from the RBA's perspective was Monday's auction
of AUD2.5bn of the May 2030 ACGB line. The tender had a strong result, eliciting
a 3.2 coverage ratio and a weighted average yield 0.44bp through the secondary
market rate - a strong result, considering the size. The fact that the AOFM can
get issuance done in size, across the curve, will be taken by the RBA as a sign
that ACGB markets have returned close to normal. From here, it seems that one
day of ACGB purchases & one day of semi purchases should be our baseline for the
RBA's bond buying (per week). However, it is hard to be definitive about this,
given the evolving nature of RBA policy. We still expect the ACGB curve to
steepen with the flood of issuance. The RBA will be comfortable with this as
long as the supply is absorbed without market disruptions. The big challenge for
the RBA is the strength of the AUD. The RBA can pass this off as more related to
risk-on sentiment generally than the impact of their limited bond purchases vs.
what others are doing. The rally in the AUD/NZD cross suggests otherwise."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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