AUD Swaps:Cautious 5-10y bid ahead of jobs data; BNG Kanga tap

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AUD swaps have been cautiously bid ahead of the domestic jobs data. EFPs widened out. BNG has increased the size of its 2032 Kanga bond line.

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  • Bond futures extend losses; Futures curve flattens

  • Cautious and light 5-10y bid ahead of jobs data

  • AOFM sells 2041 ACGBs

  • New issues – BNG 2032 Kanga tap

 

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Bond futures extend losses; Futures curve flattens

AUD bond futures extended losses today, contrasting the rebound in the USD rates market in overnight trading. Market participants attributed the move to players continuing to readjust their positions after good consumer and business confidence data on the previous day, despite weaker-than-expected CPI and a worsening PPI in China in March. A trader said the market did not interpret the RBA pause as the end of the tightening cycle, and so further interest rate hikes are possible before reaching the terminal rate, and that domestic data will be key to direct trade flow in the near term.

 

In mid-afternoon Sydney trading 3-year bond future was again underperforming, down 4-ticks at 97.12 and flattening 3s/10s futures curve by 1.5bps to 36.5bps.

 

 

Cautious and light 5-10y bid ahead of jobs data

Players have been waiting cautiously for domestic consumer inflation expectation for April and jobs data for March, that will be released later this week. Currently, the market expects unemployment rate to rise from 3.5% in February to 3.6% in March. Any downside surprise will likely trigger a sharp rally in AUD rates, according to a player.

 

Trading in swaps has therefore been subdued with more noticeable trade flow around 10-year. It traded 4-4.5bps higher in the morning, and up to 6bps higher of 3.805% in late-afternoon domestic trading.

 

5-year traded briefly at 2.5bps higher in the morning and was last seen changing hands 6bps higher of 3.49%.

 

EFPs were wider across the curve as swaps have been underperforming their underlying ACGBs on the selloff. Key EFPs were marked: 3-year up 1.5bps at 44.25bps, 5-year up 1bp at 60bps, 10-year up 2.5bps at 54.5bps.

 

 

AOFM sells 2041 ACGBs

The AOFM sold AUD800m in 3.25% April 21, 2029 ACGBs at tender today, bringing the new size of the line to AUD35.8bn. Bid-to-cover was 2.37 times and average yield was 3.0282%.

 

 

New issues – BNG 2032 Kanga tap

  • BNG Bank NV added AUD30m to its existing 2.45%, July 21, 2032 Kangaroo bond line to bring the new size to AUD860m. Priced at ACGBs + 60.25bps.

     

  • New South Wales Treasury Corp added AUD100m to its existing 3% May 20, 2027 bond line to bring the new size to AUD8.96bn. Priced at 35bps over ACGBs and leads are CBA, DB and UBS.

     

  • Select Access Investment raised AUD50m via selling May 8, 2026 FRNs that pay AUD 3M BBSW + 165bps. Lead is DB.

     

  • Treasury Corp of Victoria upsized the following bond lines:

     

    • AUD100m to 2.25%, November 20, 2034 at ACGBs + 57.5bps. The new size is now AUD5.44bn.

    • AUD600m to 0.5%, November 20, 2025 at ACGBs + 14.35bps. The new size is now AUD9.38bn.

     

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