AUD Swaps: Cautious 3y bid as recent selloff seesm excessive; Kanga tap

Bond chart 30 Jan 2023
AUD swaps have been bid with some caution in 3-year as the recent selloff seems excessive. IFC has increased the size of its 2035 Kanga.

Start a free trial to read this article

Join today to access all  Total Derivatives content and breaking news. Already a subscriber? Please Log In to continue reading.

Or contact our Sales Team to discuss subscription options.

Get in Touch
Blurred image of Total Derivatives article content

  • Bond futures weaker after strong US inflation data

  • Cautious 3y bid as recent selloff seems excessive

  • AOFM sells 2047 ACGBs

  • New issues – HSBC 5y notes; IFC Kanga tap


Click here for SDR AUD IRS trades


Bond futures weaker after strong US inflation data

After some modest rebound on Friday, the AUD rates market was weaker again, as data released from the US on Friday indicated that the latest PCE inflation gauge unexpectedly accelerated. This triggered renewed or heightened worries over more US Fed hikes to come. The short-end of the US treasury curve was sold off badly with 3-year yield up by as much as 15bps.


In mid-afternoon Sydney trading 3- and 10-year bond futures were down 9- and 7-ticks at 96.33 and 96.1 respectively. The 3s/10s futures curve was 2bps flatter at 23bps.



Cautious 3y bid as recent selloff seems excessive

Dealers said further selloff in USD rates has not triggered heavy paying in AUD swaps today, as players have began to ponder if the recent move in the rates market has been excessive. 3-year swap rates, for example, has added almost 50bps since the beginning of this month. It was paid up to 4.1% in the US session on Friday, but trading in domestic session has been subdued with light paying in the tight range around 4.095% in the afternoon session. This compared to those traded around 4.045% near market close on Friday.


5-year was paid up 7.5ps at 4.25% in the morning session, little changed from those traded in the US session. 10-year traded up to 4.48% before lunch break before last seen changing hands about 5.25bps higher of 4.4625%。


EFPs were wider with key EFPs marked as: 3-year up 0.75bp at 56.75bps, 5-year up 3bps at 40.75bps, 10-year up a basis point at 56.5bps.



AOFM sells 2047 ACGBs

The AOFM sold AUD300m in 3% March 21, 2047 ACGBs at tender today, bringing the new size of the line to AUD14.2bn. Bid-to-cover was 2.18 times and average yield was 4.2177%.



New issues – HSBC 5y notes; IFC Kanga tap

  • HSBC Sydney branch raised AUD1.65bn via selling the following March 3, 2028 bonds:


    • AUD300m, 5.1%.

    • AUD1.35bn FRNs paying AUD 3M BBSW + 105bps.


  • IFC has increased the size of its existing 1.5% April 15, 2035 Kangaroo bonds by AUD75m to bring the new size to AUD1.3bn.


  • NAB issued via ANZ USD50m in 5.25%, March 3, 2025 bonds.