AUD Swaps: 10y closed after Lowe; 5y bid; BNG, IFC, KfW Kanga taps

RBA Governor
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Lowe stayed hawkish in his testimony today, triggering paying in 5y bid but closing out of prior 10y positions; BNG, IFC and KfW in Kanga taps.

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  • 10y closed after Lowe; 5y bid; EPFs wider

  • AOFM sells 2026 ACGBs

  • New issues – BNG, IFC, KfW Kangaroo taps

 

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10y closed after Lowe; 5y bid; EPFs wider

The longer-end of the AUD rates curve has been leading a selloff today, tracking similar move in the USD rates market.

 

On Thursday, 10-year US treasury yield rose to its highest level this year following stronger-than-expected PPI data. Equities slumped and treasuries fell except for those at the front-end.

 

In mid-morning domestic trading 3- and 10-year bond futures were down 3- and 5-ticks at 96.51 and 96.185 respectively, and the 3s/10s futures curve was 2bps steeper at 32.5bps.

 

A trader said apart from the data from the US, market participants were looking for clues from RBA’s chief Lowe as he spoke during his testimony today.

 

The key messages from Lowe are as follows:

 

  • The Australian labour market stays tight.

  • High inflation in Australia is damaging and it’s dangerous to not contain inflation.

  • There is not yet evidence of moderation of CPI.

  • There would be further interest rate hikes over the months ahead.

 

The source said Lowe remained hawkish despite latest rise in jobless rate, although he also mentioned that future interest rate raise would be consistent rather than in big jumps.

 

Trading in swaps was subdued before Lowe. 10-year was bid briefly and traded about 4.5bps higher to 4.355% at the open. It then saw some closing of prior paid positions as some believe further rate hike would damage the economy in long-term. The mid-sector has been bid following Lowe’s comments. 5-year, for example, traded up to about 5bps higher of 4.105%.

 

EFPs were wider across the curve. Key EFPs were marked as: 3-year up 0.25bp at 43bps, 5-year up 1.75bps at 59.5bps, 10-year up 0.5bps at 53.75bps.

 

 

AOFM sells 2026 ACGBs

The AOFM sold AUD500m in 4.25% of April 21, 2026 ACGBs at tender today. The auction drew bid worth 4.22 times and average yield was 3.455%. The new size of the line is now AUD38.6bn.

 

 

New issues – BNG, IFC, KfW Kangaroo taps

  • BNG Bank priced a AUD30m worth of increase to its existing July 21,  2032 Social Kangaroo bonds to bring the new size to AUD690m. Priced at ASWs + 57bps to yield 4.861748% and lead is Daiwa Capital.

     

  • DZ Bank AG self-led AUD60m in 6.13% March 2, 2038 eMTNs.

     

  • IFC upsized its existing 1.5%, April 15, 2035 Kangaroo bonds by AUD100m to bring the new size to AUD1.1bn. Priced at ACGBs + 37.95bps.

     

  • KfW increased the size of its existing 2%, February 15, 2027 bonds by AUD100m to bring the new size to AUD500m. Priced at 42bps over ACGBs.

     

  • Mizuho Bank Sydney branch sold AUD500m in February 23, 2026 FRNs that pay AUD 3M BBSW + 86bps.

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