AUD Swaps: 10y turns bid after hawkish RBA; Late-day 3y payers; EDC 2028 Kanga
- 3y bond future extends losses after hawkish RBA
- 10y turns bid after earlier offers; Late-day 3y payers
- New issues – EDC 2028 Kanga
Click here for SDR AUD IRS trades
3y bond future extends losses after hawkish RBA
3-year AUD bond future was marginally lower at the open, but fell further after the RBA February meeting minutes as it indicated a hawkish stance. The key points from the minutes are:
- The board considered a hike of 25bps or 50bps.
- Australia’s cash rate is currently lower than many countries.
- There would be more interest rate hikes.
- Medium-term inflation expectations remain well anchored.
- RBA will work on bringing inflation down to 2%-3%.
In mid-afternoon Sydney trading 3-year bond future was down 3-ticks at 96.42, after dipping by 7 ticks soon after the minutes. The 3s/10s futures curve was a basis point flatter at 25.5bps.
10y turns bid after earlier offers; Late-day 3y payers
10-year swaps started off the day better offered, with trades down to 2bps lower of 4.36%. The meeting minutes then triggered closure of prior 10-year positions, as well as paying interest there. 10-year then traded up to 3.25bps higher of 4.4125%. 10-year EFP was however half a basis point tighter at 54.75bps as the underlying ACGBs have been slightly underperforming their derivatives on the selloff.
3-year was not responding well in earlier trading. Paying only emerged in mid-afternoon domestic trading when it traded up to near 4.03%, up from previous close of 4% and widening EFP there by 0.25bp to 43.75bps.
Slightly up the curve, 5-year has been busily traded, backed by better paying interest there. It traded up 5.5bps higher of 4.2% at one point, although the majority of the flow has been around flat to 0.5bp higher of 4.15%. 5-year EFP was marginally tighter at 57.25bps at time of writing.
New issues – EDC 2028 Kanga
- Export Development Canada raised AUD1bn via selling 4.5% September 6, 2028 Kangaroo bonds at 34bps over ASWs.