JGBS: Richer, Labor Earnings Slightly Missed, 30Y Supply Due

Demand at today’s A$300 million auction of the 4.75% 21 June 2054 Treasury Bond will likely be influenced by several key factors: 

• The bond’s outright yield is broadly in line with the previous auction level but sits approximately 15 basis points below the January peak.
• Investor sentiment toward longer-dated global bonds has weakened over the past week, driven by consistently stronger-than-expected US economic data, which continues to push back expectations for rate cuts.
• The 3s/10s yield curve remains about 20bps flatter than its recent peak, which had marked the steepest level since late 2021 — potentially further weighing on appetite for duration. Nevertheless, it is steeper than at the previous auction. 
• Results are due at 0200 BST / 1100 AEST.

The ESM5 had an overnight range of 5655.25 - 5706.25, Asia is currently trading 5665. The market had another test above 5700 on the back of a stronger than expected ISM Services print, but could not hold onto these gains and closed weakly. 

• “Ford shares fell after the automaker suspended its full-year guidance and said it expects to take a roughly $1.5 billion hit from US auto tariffs.”(per BBG)
• “Goldman expects a buy-the-dip opportunity in AI stocks after recent tech earnings beat expectations. While the firm’s US TMT AI Basket has sold off more than 20% in 2025, analysts predict sentiment will improve as economic data shows few signs of impact from tariffs.”(per BBG)
• The Stock market has seemed to price in a lot of positive scenarios. The reality still feels a little way off with tariffs still high and trade deals not yet finding a resolution. The market will need to start seeing some specifics on these deals this week to build on this bounce.
• The FOMC on Wednesday will be very important for markets, as traders start to align their views to be more inline with the Fed and have been reducing rate cut expectations. This implies the Fed Put for stocks to be a lot lower from the current market.
• The SPX has had a big bounce from its lows on 4800 handle, but we are approaching some key resistance between 5600-5800, the longer-term sellers should be active around here.

Fig 1: SPX Weekly Chart

Source: MNI - Market News/Bloomberg

The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 24 March 2025 for A$300mn. The sale drew an average yield of 4.9874%, at a high yield of 4.9874% and was covered 2.7067x. There were 58 bidders, 30 of which were successful and 21 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 48.0%.

• This week's ACGB supply is larger than the recent average weekly issuance of $1500mn, with A$1000mn of the 3.75% 21 April 2037 bond also due on Wednesday and A$700mn of the 2.75% 21 November 2029 bond due on Friday.
• 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.