Australian Bond Exchange

Australian Bond Exchange Weekly Update

Friday 25th August 2023

Key Points 

  • RBA releases CBDC report with input from the Australian Bond Exchange 
  • Future Fund doubles exposure to Australian corporate debt to $1 billion  
  • Treasury yields slide on weaker U.S. and European PMI data   


Market Yield on U.S. Treasury Securities: 10-Year Constant Maturity 

Source: Trading Economics  

Global Cash Rates & Inflation

The Future of Money: Findings of RBA’s CBDC Pilot Program Report Unveiled

The Reserve Bank of Australia (RBA), in collaboration with the Digital Finance Cooperative Research Centre (DFCRC), has released the report findings of its pilot program. The Australian Bond Exchange’s (ABE) participated in the pilot program.  

The pilot program explored various use cases of a Central Bank Digital Currency (CBDC), which could enable substantially improve the efficiency of the corporate bond market by democratising access, reducing counterparty risk, and enabling automatic settlement of transactions.  

In the pilot, ABE acted as a principal to sell bonds to. select participants who benefited from the quicker issuance of holding statements and faster settlement (T+0). ABE was just one of 15 use cases selected from 140 submissions, underscoring its unique and industry-leading position within the market. 

Corporate Debt In Focus: Future Fund Expands Allocation as Paul Keating Calls For Increased Market Liquidity   

In addition to Australia’s Future Fund “materially” broadening its exposure to investment-grade debt as interest rates move higher, former Treasurer Paul Keating has called for super funds to co-invest with banks in longer-term business loans, to boost Australia’s corporate debt market and provide greater fixed-income investment opportunities. 

“If you’ve got the third-biggest super savings in the world and you don’t have a corporate bond market, you’re a duffer” – Paul Keating

Keating, who was the chief architect of Australia’s superannuation system, believes Australia is at an inflection point as millions of Baby Boomers enter retirement and start looking for reliable income. In his words “it’s going to require a higher proportion of fixed and variable rate instruments, not simply equities”.

The comments were made alongside Treasurer Jim Chalmers at the annual superannuation lending roundtable, who said he would be issuing a discussion paper in the coming weeks

Source: Australian Financial Review 

European PMI Disappoints: Treasury Yields Reverse 

All eyes will be on the Jackson Hole Symposium 2023 which commenced August 24th and runs until August 26th. The much-scrutinised event will see central bankers from around the world discuss the outlook for the global economy.  Market participants will be listening intently to what is said.

Source: S&P Global PMI

Weaker PMI data was also seen in both the Eurozone and the U.K, revealing slowing in both goods-producing and services sectors.  

Source: S&P Global PMI 

What’s coming up?

  • All eyes will be on the Jackson Hole Symposium 2023 which commenced August 24th and runs until August 26th. The much-scrutinised event will see central bankers from around the world converge to discuss the outlook for the global economy, and market participants of all persuasions will be listening acutely to what is said.

*Data accurate as at 24.08.2023 

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