There’s more proof this morning of the love affair that offshore buyers have with the Aussie dollar and Australian bonds, as the quarterly balance of payments data also showed the net holdings of foreign ownership hit another new record.
Zoë McHugh, Interest Rate Strategist at the ANZ, said in a note to clients:
Non-residents purchased AUD10.7bn of CGS during the quarter, keeping their proportion of holdings of the market broadly unchanged at 67.0%. This likely reflects the weaker AUD and continued search for yield over the quarter despite the relative fall in Australian bond yields relative to other markets.
This is the third quarter in a row that offshore holdings have increased and McHugh says that the foreign appetite for Aussie government bonds is not yet sated. McHugh notes “the expected continued rise in CGS issuance to fund Australia’s fiscal position over the next few years should continue to be well absorbed.”