FOREX: AUD Crosses - AUD Continues To Pullback

Bidding at today's A$1000mn of the 3.50% 21 December 2034 bond, issue #TB168, is likely to be shaped by several key factors:

• The current outright yield is roughly 20bps below the previous auction level and around 40bps lower than the late-2024 peak. The line was last issued on 26 March 2025 for A$800bn.
• The 3s/10s yield curve has steepened sharply over the past week or so, now sitting at its steepest level since late 2021.
• Demand for duration is likely to benefit from the recent rebound in sentiment toward longer-dated global bonds, following last week’s sharp sell-off.
• The line is included in the XM basket.
• While some factors may limit the overall strength of bidding, there is an expectation of continued firm pricing at today's auction.
• Results are due at 0200 BST / 1100AEST.

The Australian Office of Financial Management (AOFM) will today sell A$1000mn of the 3.50% 21 December 2034 bond, issue #TB168. The line was last sold on 26 March 2025 for A$800bn. The last sale drew an average yield of 4.4640%, at a high yield of 4.4640% and was covered 3.7250x. There were 42 bidders, 15 of which were successful and 7 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 96.0%.

• This week's ACGB supply is smaller than the recent average weekly issuance of $1500mn, with today issuance the only one for the week.
• According to the Budget 2025-26 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance of Treasury Bonds (including Green Treasury Bonds) in 2025-26 is expected to be around $150 billion. Issuance of Treasury Indexed Bonds by tender is expected to be between $2 billion and $3 billion (additional issuance by syndication may be considered).
• For 2024-25, issuance of Treasury Bonds has been revised to around $100 billion, including around $2 billion of Green Treasury Bonds. Treasury Indexed Bond issuance will be around $3 billion.
• The previous round of ACGB Dec-34 supply saw the recent run of strong pricing at ACGB auctions continue with the weighted average yield printing through prevailing mids. Moreover, the cover ratio improved to 3.7250x from 3.1688x.
• Results are due at 0200 BST / 1100AEST.

Oil prices were little changed on Tuesday. After reaching a high late in APAC trading, they trended lower following a weak US Empire manufacturing index. Markets have been concerned about demand given the increase in trade protectionism, at a time when excess supply is projected. The IEA cut its 2025 & 2026 global consumption expectations. The USD index rose 0.4%.

• WTI was flat at $61.53/bbl but has started today slightly lower at $61.48 following data showing a US crude stock build. It fell to a low of $60.88 before recovering somewhat. It is off the April 9 low of $55.12 but still down almost 14% this month. Any strength is seen as corrective. Initial support is at $55.12 with resistance at $64.85, a recent breakout level.
• Brent fell to $64.21/bbl but finished little changed at $64.85 to be down 13.3% in April. It traded in a fairly narrow range on Tuesday and didn’t approach either initial support at $58.40 or resistance at $67.95. The benchmark is slowly unwinding the recent oversold condition.
• Bloomberg reported that there was a US crude inventory build of 2.4mn barrels last week, while products fell again with gasoline down 3mn and distillate 3.2mn, according to people familiar with the API data. The official EIA figures are out later today.