Halister News

(Bloomberg) -- ANZ recommends buying Australia’s November 2028 govt note and simultaneously selling March 2047 bond at a spread of 86bps, senior rates strategist Martin Whetton writes in note Wednesday.

• Targets spread of 125bps with stop-loss at 70bps
  • One of the key features of Australia’s 2017-18 budget that’s due for release next week will be a shift in the narrative of good debt and bad debt, with an eye to use debt to fund infrastructure: Whetton
  • Given this, risk to issuance will be to the upside and increasingly toward longer-tenor bonds
  • Office of Financial Management has already flagged its intention to issue into the long end of the curve via syndicated taps
  • RBA is looking to modestly lift its outlook for headline inflation, which would bolster a steepening trade
  • ANZ would expect to see U.S. Treasury increase issuance of 30 year bonds, which would steepen U.S. curve. Australia’s high correlation to U.S. would impact the ACGB curve