AUD Swaps: 3-10y given after weak PMI; Rentenbank 2030 Kanga tap

Chart numbers 14 Jun 2022
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Latest PMI data showing a contraction in March has backed offers in 3-10y AUD swaps. EFPs were mixed. Rentenbank 2030 Kanga tap.

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  • Bond futures extend gains as PMI shows contraction

  • 3-10y offered; EFPs mixed

  • AOFM sells 2026 ACGBs

  • New issues - Rentenbank 2030 Kanga tap

 

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Bond futures extend gains as PMI shows contraction

The AUD rates market extended gains today, tracking though underperforming the rally in the USD rates market on Thursday and following domestic data.

 

In overnight trading, front-end US treasuries soared as players scrambled to increase their bets on a pause as soon as May, and deeper cuts this and next year. 2-year US treasury yield slumped by 15bps intraday, widening 2s/10s by almost 10bps. The market is now pricing in only around 10bps of further US Fed hike, and 200bps worth of cuts by the end of 2024.

 

Data released by Judo Bank Australia indicated that activities in the manufacturing and services sectors were forecast to show a contraction in March. Compared to the previous month, the index for manufacturing fell from 50.5 to 48.7. It was the first time this index fell below 50 since May 2020. The index for the service sector was down from 50.7 to 48.2.

 

Players in the Australian market have become more confident about a nearer RBA pause, which was reflected in 3-year bond future gaining by 8-ticks after mid-day. In mid-afternoon Sydney trading it was marked 5-ticks higher at 97.17, and the 3s/10s futures curve was 0.5bp flatter at 40.5bps.

 

 

3-10y offered; EFPs mixed

Trading in swaps has been mostly around the more liquid tenors with relatively busier flow in 10-year. A trader reported offered-side flow in 10-year in a tight range around  3.895% in the morning. Receiving turned busy after lunch break and 10-year traded down to below 3.845%, down from previous close of around 3.90%. 10-year EFP widened out by 0.25bp to 62.25bps.

 

3-year traded 2-3bps lower at 3.35%-3.36% in earlier morning domestic trading. It then traded down to below 3.315% in the afternoon session. EFP was however a basis point wider at 51.25bps.

 

5-year traded in several clips, backed by receiving interest there. It traded mostly around 3.55% after lunch break, down from previous close of 3.6% and tightening 5-year EFP by 0.75bp to 72.25bps.

 

 

AOFM sells 2026 ACGBs

The AOFM sold AUD500m in 4.25% April 21, 2026 ACGBs at tender today, bringing the new size of the line to AUD13.8bn. Bid-to-cover was 4.97 times and average yield was 2.8595%.

 

 

New issues - Rentenbank 2030 Kanga tap

  • Landwirtschaftliche Rentenbank added AUD200m to its existing 1.9%, January 30, 2030 Kangaroo bond line to bring the new size to AUD300m. Priced at ACGBs + 61.55bps.

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