AUSSIE BONDS: ACGB Jun-31 Auction Results

Outflows in all regions on Tuesday with Taiwan continuing to decent selling following chips restrictions being announced from the US, however, while Nvidia has announced they will plan to build a headquarters in Taiwan. India has had the worst start to the year with 2.6b of outflows so far.

• South Korea: Recorded outflows of -$148m yesterday, contributing to a 5-day total of -$287m. YTD flows are flat at $0. The 5-day average is -$57m, worse than the 20-day average of -$70m and the 100-day average of -$146m.
• Taiwan: Experienced outflows of -$352m yesterday, resulting in a 5-day total of -$3.87b. YTD flows are negative at -$2.57b. The 5-day average is -$773m, significantly worse than the 20-day average of -$188m and the 100-day average of -$126m.
• India: Posted outflows of -$495m yesterday, contributing to a 5-day total of -$2.06b. YTD flows are negative at -$2.62b. The 5-day average is -$411m, worse than the 20-day average of -$223m and the 100-day average of -$49m.
• Indonesia: Registered outflows of -$39m yesterday, with the 5-day total at -$94m. YTD flows are negative at -$244m. The 5-day average is -$19m, slightly better than the 20-day average of -$34m, but worse than the 100-day average of +$5m.
• Thailand: Recorded outflows of -$63m yesterday, resulting in a 5-day total of -$188m. YTD flows are negative at -$122m. The 5-day average is -$38m, worse than the 20-day average of -$11m and the 100-day average of -$6m.
• Malaysia: Posted outflows of -$55m yesterday, contributing to a 5-day total of -$203m. YTD flows are negative at -$261m. The 5-day average is -$41m, worse than the 20-day average of -$26m and the 100-day average of -$15m
• Philippines: Recorded outflows of -$15m yesterday, resulting in a 5-day total of -$38m. YTD flows are negative at -$52m. The 5-day average is -$8m, worse than the 20-day average of -$7m but equal to the 100-day average of $0m.

Table 1: EM Asia Equity Flows

In Tokyo morning trade, JGB futures are slightly stronger, +3 compared to settlement levels. 

• M2 & M3 Money Stock 1.3% y/y and 0.8% y/y respectively in December.
• Overnight, US yields finished slightly mixed after US PPI printed softer than expected. They were lower at the front end but higher at the back end. The 10-year yield finished at 4.79%.
• Focus turns to tomorrow's headline CPI inflation data for December where rental inflation is expected to accelerate to an average figure that firmly rounds to 0.3% M/M in December. Core goods inflation will be closely looked at amidst heavy focus on potential tariffs under the second Trump administration but also with a further near-term dampening factor from continued US dollar appreciation. Fed Beige Book is released at 1400ET.
• Today, the local calendar will also see Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs. 

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 3.50% 21 December 2034 bond, issue #TB168. The line was last sold on 27 November 2024 for A$800bn. The last sale drew an average yield of 4.4329%, at a high yield of 4.4350% and was covered 2.8375x. There were 34 bidders, 19 of which were successful and 9 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 17.2%.

• This week's ACGB supply is the first of the year and at the recent average weekly issuance of A$1.5bn, with A$700mn of the 2.75% 21 November 2027 bond to be issued on Friday.
• According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance has been revised to around $95 billion ($46.4 billion has been completed). This includes around $2 billion of Green Treasury Bond tenders ($600 million has been completed). Issuance of Treasury Indexed Bonds is expected to be around $3 billion ($1.7 billion has been completed).
• The previous round of ACGB Dec-34 supply saw the recent run of strong pricing at ACGB auctions continue with the weighted average yield printing through prevailing mids. However, a lower outright yield and flatter curve did appear dampen the overall strength of bidding, with the cover ratio decreasing to 2.8375x from 3.2125x previously. The deterioration in sentiment towards global bonds over recent months also likely weighed.
• Several factors will likely influence today's auction bidding. The current outright yield is around 30bps higher than the previous auction but approximately 40bps lower than the cyclical peak in late 2023.
• Moreover, the 3/10 yield curve is around 10bps steeper than at the previous auction around its steepest since November 2023.
• The line is included in the XM basket.
• However, there has been a notable deterioration in sentiment towards global bonds since September.
• While some factors may limit the overall strength of bidding, there is an expectation of continued firm pricing at today's auction.
• Results are due at 0000 GMT / 1100AEST.