Westpac: A$ Net Flow Delta Turned Negative In Jan.

Westpac note that "the 20-day rolling sum of our net A$ Flow delta indicates that the previous strong buyside that dominated the second half of 2020 began to dissipate in December and turned to outright selling in January. That has coincided with A$ bonds generally underperforming their US counterparts over that period. Looking at the composition of investors, it was largely funded accounts, such as hedge funds and balance sheets that have been the dominant sellers. Indeed, sovereigns remained net buyers and other cohorts have basically been neutral over that period. The consistent derivative pay-side that began in November, continued into the end of January, although its composition switched from corporates to hedge funds, while there was still some net buying of semis over the period. There has also been little support for the >10yr maturities, despite the significant curve steepening. Indeed we have seen net selling of the 5-10yr maturity bucket which suggests that there has been a large subscription to the global reflation trade and perhaps this was achieved via selling from the private sector to the RBA in the course of its QE programme."