No "reasonable" seller of April 2024 bond at RBA's QE

By Sophia Rodrigues

The RBA's bond purchase program included the April 2024 government bond for the first time since it abandoned the yield target policy last week. But not a single bond was bought by the RBA. It is unlikely there were no offers, so the only likely explanation is there were no "reasonable" offers to sell.

Just a few days ago, the yield on the April 2024 bond rose sharply as market brought forward timing of RBA rate hike, and simultaneously expected the RBA to buy the bond to defend the yield target. As it turned out, the RBA dropped the target  last week (November board meeting)  and said it would buy the bond under its  bond purchase program. The expectation was that there are many keen sellers in the market but the auction results show that may not be the case.