AUD Swaps: Bid ahead of FOMC; Auction draws strong demand

AUD swaps have been better bid, despite earlier gains in the underlying ACGBs, as players prepared for the FOMC.

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  • Swaps bid ahead of FOMC

  • 2034 ACGB auction draws strong demand

  • New issues


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Swaps bid ahead of FOMC

AUD bond futures were mostly firmer in the morning, tracking the gains in US treasuries in overnight trading.


Dealers said the earlier gains in the bond futures was also in part driven by earlier comments from RBA’s Head of Economic Analysis Marion Kohler. In an opening statement to the Senate Select Committee on the Cost of Living earlier today, Kohler said inflation in Australia might have peaked at around 8% in December, and that it would ease of the course of this year.


The momentum, however, has failed to sustain and the bond futures turned weaker in mid-afternoon Sydney trading with 10-year down 2-ticks at 96.425. The 3s/10s futures curve was unchanged at 36.5bps.


Trading in swaps has not been overly busy ahead of the FOMC decision due tomorrow. Dealers reported mostly better paying in swaps on the day, despite earlier gains in the underlying ACGBs as players prepared for a hawkish US Fed.


10-year, for example, traded a tad higher at the open, and went through up to 1.5bps higher at 4.125% in the afternoon session.


3-year saw some brief receiving at down to 3.595% in mid-morning domestic trading, but nevertheless traded in a tight range of 2bps higher of 3.6275% afterwards.


EFPs were wider with key EFPs marked as follows: 3-year up 0.5bps to 42.75bps, 5-year up 1.75bps to 62.75bps, 10-year up 0.75bps at 56bps.



2034 ACGB auction draws strong demand

The AOFM sold AUD700m in 3.75% May 21, 2034 ACGBs at tender today, bringing the new size of the line to AUD14.7bn. Bid-to-cover was 5.12 times and average yield was 3.5911%.



New issues

  • KfW sold AUD550m in 4.2% February 8, 2029 Kangaroo bonds. Leads are ANZ, JPM and RBC.


  • Landesbank Baden-Württemberg self-led AUD35m in 3.2%, February 24, 2025 bonds.