AUSSIE BONDS: AUCTION PREVIEW: ACGB Nov-33 Supply Due
The Australian Office of Financial Management (AOFM) will today sell A$1000mn of the 3.00% 21 November 2033. The line was last sold on 21 August 2024 for A$800mn. The sale drew an average yield of 3.8724%, at a high yield of 3.875% and was covered 3.3812x. There were 40 bidders, 19 of which were successful and 13 were allocated in full.
- This week's ACGB supply is at the top end of the recent average weekly issuance of $1500-2200mn, with A$300mn of the 4.25% 21 June 2034 bond issued on Tuesday and A$900mn of the 4.25% 21 March 2036 bond sold on Wednesday.
- During the first half of 2025-26, the AOFM plans to: issue a new October 2036 Treasury Bond (by syndication and subject to market conditions); conduct 2 Treasury Bond tenders most weeks; hold 1-2 Treasury Indexed Bond tenders each month.
- Issuance of Treasury Bonds (including Green Treasury Bonds) in 2025-26 is expected to be around $150 billion. Issuance of Treasury Indexed Bonds in 2025-26 is expected to be between $2 billion and $3 billion.
- Results are due at 0200 BST / 1100 AEST.
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US: More Countries To Receive Trade Details Wednesday US Time - Trump
US President Trump has commented via a Truth Social post that more countries will receive trade details on Wednesday morning US time. He states 7 countries will receive details in the morning, with more to follow on Wednesday afternoon US time. See the full post below. Market focus will rest on tariff rates and how they compare with the early April announcements.
"Donald J. Trump @realDonaldTrump. We will be releasing a minimum of 7 Countries having to do with trade, tomorrow morning, with an additional number of Countries being released in the afternoon. Thank you for your attention to this matter!"
JGBS: Futures Closed Weaker, US Tsys Cheaper, Focus On FOMC Minutes Today
In post-Tokyo trade, JGB futures closed weaker, -19 compared to settlement levels, after US tsys closed with modest losses.
- (Bloomberg) - As the dollar recovers from an extended slump, its Japanese counterpart is falling out of favor among traders. One-week dollar-yen risk reversals -- which gauge the premium traders are willing to pay for call versus put options -- now trade at some 37 basis points in favor of Japan's currency. That's the least bullish level since October, and reflects growing jitters over Japan's spending outlook ahead of the key upper house election later this month.
- (Bloomberg) - "Junko Koeda, one of the BOJ's newest board members, signaled a possible upward revision to the central bank's inflation view this month. Such a move would keep open the possibility of another rate hike this year."
- "Political risk in Japan is casting a shadow over super-long JGBs. After flirting with its record high on Tuesday, the yield on 30-year bonds is set to face more upward pressure as analysts point to growing fears of fiscal deterioration. Investors now turn to a 20-year bond sale Thursday."
- Today, the local calendar will see M2 & M3 Money Stock and Machine Tool Orders(P).
AUSSIE BONDS: Weaker With US Tsys, RBA's Surprise Still Being Digested
ACGBs (YM -3.0 & XM -4.5) are weaker with US tsys. Focus on Wednesday afternoon's June FOMC minutes release.
- Markets were also on edge after President Trump announced a 50% tariff on copper and will announce more on "pharma, chips, other things." after threatening a 200% duty on pharmaceuticals.
- (Bloomberg) -- "The shock call and market ructions worsened criticism that radio silence from Governor Michele Bullock and her board had left markets rudderless, despite a wide-ranging effort by the RBA to do the opposite - improve communications."
- Cash ACGBs are 3-4bps with the AU-US 10-year yield differential at -10bps.
- The bills strip are 1-3bps cheaper.
- "Bullock's main message today was that the hold decision wasn't about policy direction, but timing. She wants to see the next quarterly consumer price index reading to ensure prices are in check".
- RBA-dated OIS pricing is slightly mixed across meetings today. A 25bp rate cut in August is given an 87% probability, with a cumulative 73bps of easing priced by year-end (based on an effective cash rate of 3.84%).
- Today, the local calendar will see a speech by RBA Hauser.
- The AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond tomorrow and A$1000mn of the 2.75% 21 November 2029 bond on Friday.
