AUD Swaps: 10y given after jobs data; 3y bid; Curve steeper

Steep curve 9 Nov 2020
Higher-than-expected jobless rate has prompted some offered-side interest in 10y AUD swaps which faded in the afternoon. The curve steepened up.

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  • Bond futures trim losses briefly after domestic jobs data

  • Jobs data backs 10y offers; 3y bid; Curve steeper

  • New issues


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Bond futures trim losses briefly after domestic jobs data

AUD bond futures were down in early-morning domestic trading, tracking the selloff in USD rates in overnight trading which was in turn driven by hawkish comments from US Fed official in the latest minutes for the US Fed policy meeting.


3-year bond future was down by 7-ticks before erasing all the losses to marked unchanged at 96.09 after domestic jobs data.


Official data released earlier today showed that unemployment in Australia was 3.7% in July, up from 3.5% in June and above economists’ forecast of 3.6%. The move was driven by an unexpected contraction of new full time jobs creation. Overall new jobs creation was down 14.6K, compared to 31.6K of new jobs in June and consensus of 15K of new jobs.


Similar move was seen in 10-year bond future but the selloff resumed very soon. 10-year was marked 9-ticks lower of its fresh low of 95.705 at mid-day, steepening 3s/10s futures curve by 3bps to 32.5bps.



Jobs data backs 10y offers; 3y bid; Curve steeper

10-year swaps have shown a relatively stronger reaction to domestic data. A dealer reported good amount of 10-year offers soon after the jobs data with trades between 4.5% and 4.51%. Interest from the other side of the fence emerged after mid-day when it traded 5.5bps higher of 4.61%. 5-year traded briefly at around 0.75bp lower of 4.3825% in early-afternoon.


3-year, on the other hand, traded in several clips between 4.1925% and 4.195%, up from previous close of around 4.15%.


The swap curve steepened up to 10-year in the afternoon session. EFPs were mixed. 3-year was up marginally at just below 24.5bps, 5-year up 1.75bps at 41.5bps and 10-year was unchanged at just above 35.5bps.



New issues

  • Natwest Markets raised AUD600m via selling the following August 23, 2028 bonds:


    • AUD200m paying AUD 3M BBSW + 173bps.

    • AUD400m, 5.899%.


  • NBN Co Ltd issued AUD850m in 5.2% August 25, 2028 bonds at ACGBs + 130.3bps.