Australian 3Year Bond Yields Hit Record Low, A at 1Week High


SYDNEY, March 12 Reuters Yields on Australian threeyear government bonds slipped to a record low on Friday as the countrys central bank pushed back against market speculation of early interest rate hikes though the local dollar jumped to a oneweek high.

Yields in the cash market had jumped to 0.188 late last month during a global bond selloff. Threeyear bond futures had then implied a yield of 0.385, much higher than the Reserve Bank of Australias RBA 0.1 anchor.

In response, the RBA this week doubled the fee it charges for lending out April 2023 and April 2024 Australian government bonds, both key to policy stimulus.

That sent the threeyear bond yield to under 0.096, the lowest on record.

If you see this from the RBAs yield curve control policy this move has definitely worked in the sense that its reinforced their target at 0.1, said Robert Thompson, a rates strategist at RBC.

But it hasnt necessarily stopped the market from speculating or anticipating rate hikes earlier than the RBA thinks they will happen.

Thompson pointed to the twoyearoneyear swap rate at 61 basis points, which suggested more than two rate hikes by 2023.

On Friday, the threeyear bond contract was down a shade, implying a yield of 0.228. It had earlier jumped to 0.385.

Dovish commentary this week by RBA Governor Philip Lowe also helped stem some of the bond selloff after he dismissed ratehike talks, analysts said.

That still did not stop the Aussie dollar from hitting a oneweek high on…

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