Markets Overview
- ASX SPI 200 futures up 0.9% to 7,873.00
- Dow Average up 1.1% to 39,721.36
- Aussie little changed at 0.6747 per US$
- US 10-year yield fell 1.2bps to 4.2841%
- Australia 3-year bond yield fell 3 bps to 4.08%
- Australia 10-year bond yield little changed at 4.34%
- Gold spot up 0.3% to $2,371.25
- Brent futures up 0.9% to $85.38/bbl
Economic Events
- 09:00: (AU) June CBA Household Spending YoY, prior 4.3%
- 09:00: (AU) June CBA Household Spending MoM, prior 1.1%
- 10:30: (AU) Australia to Sell A$1 Billion 133-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 63-Day Bills
- 11:00: (AU) July Consumer Inflation Expectation, prior 4.4%
Asian equities were primed for an early advance after a rally in the world’s largest tech stocks lifted US and global shares to new highs ahead of inflation data due later Thursday.
Equity futures for Japan, Australia and Hong Kong stocks all rose, echoing the bullish pulse on Wall Street on Wednesday that led the S&P 500 and Nasdaq 100 each more than 1% higher to new peaks. The S&P 500 has advanced in each of the past seven sessions, its longest winning streak since November, helping propel a gauge of global equities to a record.
The gains reflected a sharp rally in the final minutes of trade that centered upon the likes of Nvidia Corp. and Apple Inc. The iPhone maker said it aims to ship 10% more new devices after a bumpy 2023.
Treasuries remained fairly stable after a strong $39 billion sale of 10-year bonds, with yields slipping one basis point to 4.28%. Swaps are pricing in two Fed cuts in 2024 — and higher chances of the first coming in September.
Other News
ANZ’s markets division overstated the value of government bonds it traded by more than $50 billion in 12 months alone, boosting its prospects of winning lucrative mandates issuing Commonwealth debts.
The bank admitted to the Australian Office of Financial Management, which manages government debts, that figures it had supplied detailing the volume of turnover had been incorrect.
As one of 19 market makers for Australian bonds, ANZ is required to submit quarterly figures to the agency. The AOFM selects the largest traders for issuances.
ANZ had first told the AOFM it had facilitated $137.6 billion in government bond trades for clients in the year ended June 2023. The correct number, it disclosed in August, was actually $83.2 billion, a difference of nearly 65 per cent.
ANZ’s trading of government bonds is already under intense scrutiny from both AOFM and the Australian Securities and Investments Commission. The division is being investigated by the regulator for allegedly manipulating the benchmark 10-year futures rate when it was appointed a manager for a $14 billion government bond sale last year, The Australian Financial Review revealed in May.
By driving down the price of bond futures, ANZ’s traders may have delivered the bank a windfall profit and multimillion-dollar bonuses for themselves – while adding up to $80 million in extra borrowing costs for taxpayers.
Since that issuance, ANZ has been excluded from two major government transactions, including an $8 billion debt sale six months later and a marquee $7 billion green bond last month. It was a notable absence as Commonwealth Bank, National Australia Bank and Westpac were on the coveted deal, the government’s first green bond.
ANZ typically makes about $5 million to $10 million a year from acting as a manager of large syndicated Australian government bond sales every year, and multiples of that amount from facilitating trades associated with the issuance. Banks such as ANZ also broker trades in government bonds throughout the year at little or no profit in the hope of boosting their rankings and snaring a lead manager role.
