Westpac: A$ Net Buy-Side Delta Increased In December And January

Westpac note that “the 20-day rolling sum of net A$ flow delta was mostly in buy-side territory in the past two months. Net buy-side flows in December reached the highest levels seen since May 2021 before dipping into sell-side territory into year end. Net buy-side flows then rebounded in January, increasing into month end. Looking at the composition of investors, sovereign and domestic real money accounts were the largest buyers in the past two months, while the sell-side flows came mostly from corporate and funded accounts. There were large net government bond-buying in mid-December, which dissipated into year-end but resumed in January, as well as increased net buying flows of corporate bonds, possibly suggesting that clients are coming into the market looking for yield or profit taking on short trades. There were also large net derivative pay-side flows in mid-December which aligns with recent hawkish market outlook on central banks and monetary policy. The 3-/10-Year curve continued to flatten in the past two months, our flows showed large net buying in the >10-Year maturities and net selling in the 2- to 5-Year and 5- to 10-Year maturities which decreased at the end of January.”