Fed takes a keen interest in RBA’s bond buying

Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 18-Jun-20

The yield on three-year Australian government bonds has traded within a narrow range of 0.21 per cent to 0.28 per cent since March, when the Reserve Bank commenced a targeted bond-buying program aimed at keeping the yield at around 0.25 per cent. The success of yield curve control in Australia has prompted the US Federal Reserve to assess the strategy, although Stephen Halmarick from the Commonwealth Bank says it is unlikely to adopt this in the near-term. The Federal Reserve’s focus has been on buying a certain amount of bonds each month.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

$A doing its job to help stabilise the economy

Original article by Sarah Turner, Jonathan Shapiro
The Australian Financial Review – Page: 31 : 22-Apr-20

The Reserve Bank of Australia has bought $47bn worth of federal and state government bonds since 20 March. The central bank has progressively reduced its daily bond purchases from $5bn to just $500m since then, and it will now buy federal government bonds three times a week and state bonds just once a week. Meanwhile, RBA governor Philip Lowe says the Australian dollar fell more sharply than he had expected in March. It reached a low of $US0.5741 and has since recovered to around $US0.63. Lowe says the currency has been a "great shock-absorber" for the domestic economy over the last three decades.

CORPORATES
RESERVE BANK OF AUSTRALIA

Record bond deal shows confidence in Australia: PM

Original article by Sarah Turner, Vesna Poljak, Jonathan Shapiro
The Australian Financial Review – Page: 29 : 17-Apr-20

The Australian Office of Financial Management has revealed that domestic investors accounted for 68.1 per cent of the federal government’s $13bn bond deal. Banks in turn bought more than 50 per cent of the new bonds, while investment managers accounted for 25 per cent of the issuance. Prime Minister Scott Morrison says the strong support for the bond deal demonstrates that investors are confident that Australia will be able to repay its debt.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY. OFFICE OF FINANCIAL MANAGEMENT, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Reserve Bank now important bond player

Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 15-Apr-20

Su-Lin Ong of RBC Capital Markets says the federal government has issued some $48bn worth of bonds so far in 2019-20. She estimates that the Reserve Bank of Australia has bought about $36bn worth of these government bonds in the last three weeks, as part of its quantitative easing program. Westpac’s Damien McColough notes that the central bank has emerged as one of the largest bond fund managers in the local market. Meanwhile, Ong says government bond issuance for 2019-20 could potentially top $160bn.

CORPORATES
RBC CAPITAL MARKETS, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Reserve Bank likely to slow bond buying

Original article by Jonathan Shapiro
The Australian Financial Review – Page: 30 : 7-Apr-20

The Reserve Bank of Australia’s quantitative easing program commenced on 20 March, and the central bank initially began purchasing $5bn worth of commonwealth government bonds per day. It has bought some $31bn of such bonds to date, including $10bn in the week ended 3 April. The RBA has been gradually been winding back its bond buying, and Damien McColough of Westpac says that even if its current momentum is maintained it would hold about $80bn worth of government bonds by the end of June. This would constitute about 30 per cent of the government bonds on issue. The RBA has also bought some $5bn worth of state government bonds.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Sweden dumps Oz bonds over climate inertia

Original article by Paul Garvey
The Australian – Page: 4 : 15-Nov-19

Shane Oliver of AMP Capital says the Swedish central bank’s decision to divest bonds issued by the Western Australian and Queensland government is unlikely to have much impact on Australian bond prices. Sveriges Riksbank deputy governor­ Martin Floden has cited Australia’s lack of sufficient action on climate change for the move. The central bank has sold its holdings of bonds issued by the Canadian province of Alberta for the same reason.

CORPORATES
SVERIGES RIKSBANK, AMP CAPITAL INVESTORS LIMITED, INVESTOR GROUP ON CLIMATE CHANGE, S&P GLOBAL RATINGS, WESTERN AUSTRALIA. DEPT OF TREASURY AND FINANCE

Treasury $1bn debt sale comes up short

Original article by David Rogers
The Australian – Page: 26 : 25-Oct-19

The Australian Office of Financial Management’s CEO Robert Nicholl has downplayed the fact that investors did not fully support a new issuance of Treasury notes. The AOFM attracted bids totalling $936m for a $1bn issuance of Treasury Notes that will mature on 24 January 2020. Nicholl notes that demand for short-term debt instruments such as Treasury Notes can vary significantly, adding that the shortfall will not be a concern for the federal government unless it becomes a regular occurrence.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY. OFFICE OF FINANCIAL MANAGEMENT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Federal debt boss: why borrowing isn’t easy

Original article by Adam Creighton
The Australian – Page: 4 : 26-Aug-19

Australian Office of Financial Management CEO Rob Nicholl has rejected suggestions that the federal government’s capacity to increase its borrowings has been boosted by the downturn in bond yields. The yield on 10-year government bonds fell below the cash rate of one per cent earlier in August, and Nicholls argues that demand for government debt has not risen despite a global downturn in bond yields. The federal government is resisting pressure to ramp up its infrastructure spending instead of prioritising a return to a Budget surplus.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY. OFFICE OF FINANCIAL MANAGEMENT

Aussie 10-year bond yield drops below 1pc

Original article by Patrick Commins, Vesna Poljak, Jonathan Shapiro
The Australian Financial Review – Page: 13 & 27 : 7-Aug-19

The fallout from the escalating trade and currency war between the US and China has seen the yield on Australian 10-year government bonds fall below the cash rate for the first time. The bond yield reached a record low of 0.968 per cent on 6 August, before rising to 1.047 per cent late in trading. Meanwhile, the futures market has priced in an 0.25 per cent reduction in the cash rate by October, after the Reserve Bank left official interest rates unchanged at one per cent at its monthly board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, QIC LIMITED, ARDEA INVESTMENT MANAGEMENT PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UNITED STATES. DEPT OF THE TREASURY, PEOPLE’S BANK OF CHINA, EXANTE DATA

Australian government bonds forecast to fall below 1pc

Original article by Sarah Turner
The Australian Financial Review – Page: 13 & 16 : 18-Jun-19

The yield on 10-year Australian government bonds recovered slightly to 1.39 per cent on 17 June, after falling to a record low of 1.37 per cent in the previous week. Concern about the global economic outlook is weighing on bond yields worldwide, and Sally Auld of JP Morgan says the current bearish environment could see Australia’s 10-year bond yield fall below one per cent by the end of 2019. Steve Miller of Grant Samuel Funds Management says the expectation of further official interest cuts is putting downward pressure on local bond yields.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, GRANT SAMUEL FUNDS MANAGEMENT PTY LTD, ARDEA INVESTMENT MANAGEMENT PTY LTD, RESERVE BANK OF AUSTRALIA