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The Reserve Bank of Australia (RBA) extended its purchasing programme into semi-government bonds on 25 March. Despite the RBA buying across the sector, however, most semi-government yields ended the day wider.
The early signs for the Reserve Bank of Australia (RBA)’s asset purchasing have been positive, analysts say, and three-year government bond yield is already heading towards its target. The reserve bank has also begun buying further out along the curve. Attention is focused on longer-dated performance, along with potential semi-government bond purchases.
On 23 March, KangaNews hosted a live dial-in featuring some of the leading market economists covering Australia. It was the same illustrious panel that was to be a highlight of the KangaNews Debt Capital Markets Summit – which had been scheduled for the same day. In a rapidly changing world, the economists provided insight into a unique and vast, but practically unquantifiable, risk.
The Reserve Bank of New Zealand added its voice to the global chorus of central banks implementing unconventional monetary policy measures with the launch of a large-scale asset purchase programme on 23 March. This is designed to reverse tighter funding conditions from the COVID-19 crisis.
The Australian Office of Financial Management released further details on March 20 about its A$15 billion (US$8.8 billion) fund to support authorised deposit-taking institutions (ADI) and nonbank lenders via purchases of asset-backed securities. The AOFM revealed it would “provide support primarily (but not exclusively) within the non-ADI market”.
The Reserve Bank of New Zealand (RBNZ) has introduced a range of new measures to ensure the smooth functioning of financial markets. The measures, announced on 20 March, are aimed at keeping short-term interest rates low amidst the COVID-19 crisis.
The A$15 billion (US$8.5 billion) made available to the Australian Office of Financial Management (AOFM) to support bank and nonbank lenders via purchases of asset-backed securities could be enough to account for the bulk of the public securitisation market for the balance of 2020.
The Reserve Bank of Australia (RBA) took unprecedented action on 19 March to provide a “bridge” to an expected economic recovery after the COVID-19 crisis. RBA governor Philip Lowe expects the support package to be required for the foreseeable future but says he can see better times on the horizon.
The Reserve Bank of Australia announced measures on 19 March designed to support the economy. Along with the expected cut to the cash rate and QE – to be delivered in the form of yield-curve targeting – the RBA will roll out a term-funding facility for banks and additional funding for lending to SMEs alongside “a complementary programme of support for the nonbank financial sector, small lenders and the securitisation market”, which the Australian Office of Financial Management (AOFM) will deploy.
A stressed market in New Zealand is leading analysts to call for urgent intervention from the central bank. Hours ahead of an expected launch of QE in Australia, the suggestion is that the Reserve Bank of New Zealand (RBNZ) needs to follow suit to prevent further deterioration in local liquidity conditions.
Australia’s major banks are well prepared to support households and businesses as they come under increasing pressure from an economy stalled by COVID-19, analysts and funders say. Even as financial market liquidity becomes more challenged, federal government, central bank and regulatory positioning stands the banks in good stead.
Following an emergency meeting of its board, the Reserve Bank of New Zealand implemented an out-of-cycle 75-basis-point cash rate cut and signalled its next step would be to buy government bonds, if necessary. The central bank also delayed implementation of new capital standards for banks by 12 months.