EM ASIA CREDIT: JSW STEEL (JSTLIN, Ba1/NR/BB) requests Bushan Power refund

The Australian Office of Financial Management (AOFM) will today sell A$1000mn of the 3.25% 21 April 2029 bond, issue #TB138. The line was last sold on 4 December 2024 for A$700mn. The sale drew an average yield of 3.9558%, at a high yield of 3.9575% and was covered 4.2143x. There were 33 bidders, 10 of which were successful and 5 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 50.0%.

• This week's ACGB supply is smaller with the usual weekly issuance of A$1.5bn.
• The previous round of Apr-29 supply saw the weighted average yield print 1.42bps below the prevailing mid-yield. While the cover ratio declined from 4.7486x at the prior auction, it remained robust at 4.2143x, underscoring continued investor interest.
• 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.
• Results are due at 0200 BST / 1100 AEST.

TYM5 is trading 110-28, up 0-02 from its close. 

• Risk has turned higher with Trump’s U-turn on Jerome Powell, saying he has no intention of firing him.
• Federal Reserve Bank of Minneapolis President Neel Kashkari said its the central bank's job to make sure tariffs don't spur an ongoing inflation problem, echoing recent comments by Fed Chair Jerome Powell.
• US stocks have had a second leg higher in Asia as Tesla shares rally up to 7%, during its earning call Elon Musk said he is to pull back significantly from DOGE.
• “The options market is showing a high level of unease around US assets, with premiums to protect against losses at their highest since the "flash crash" of 2021.”(per BBG)
• “Investors are aggressively driving up the price of puts that hedge against the risk of a yield spike, reflecting a deepening angst among many investors.”(per BBG)
• “The lack of conviction in Treasuries is also evident in the cash market, with neutral positions rising to the most so far this year, and options traders increasingly favoring puts that would provide protection against further declines in shares.”(per BBG)
• The US 10-year yield is trading in Asia at 4.35%, after closing at 4.4008%
• The US 2-year yield is dealing in Asia around 3.84%, after closing around 3.819%
• Data: US S&P Global Services & Manufacturing PMI

ACGBs (YM -5.0 & XM +2.5) have twist-flattened after US tsys finished mixed on Tuesday. 

• US curves unwound a large portion of Monday's steepening on Tuesday, with bonds outperforming weaker short-end rates as markets reassessed tariff-tied risks to global trade and the Trump Administration's efforts to meddle with the Federal Reserve's independent policymaking.
• Risk-on sentiment has extended into today’s Asia-Pac session after US President Trump stated that he had no intention of firing Fed Chair Powell (which has been a cause of concern recently and around the outlook for Fed Independence).
• Trump also stated that the final tariff number for China wouldn't be near the current 145%.
• S&P Global Flash PMIs for April have printed.
• Cash ACGBs are 5bps cheaper to 2bps richer with the AU-US 10-year yield differential at -13bps.
• Swap rates are 4bps higher to 2bps lower, with the 3s10s curve flatter.
• The bills strip is cheaper with pricing -5 to -9.
• RBA-dated OIS pricing is 2-8bps firmer across meetings today. A 50bp rate cut in May is given a 13% probability, with a cumulative 115bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Today, the local calendar will see the AOFM’s planned sale of A$1000mn of the 3.25% 21 April 2029 bond