Australian 10-year bond yield hits over 26-month low amid concerns over global growth slowdown

Australian government bonds gained across the curve during early Asian session Thursday as investors moved to safe-haven buying amid rising concerns of a global growth slowdown. Also, demand for U.S. Treasuries and German bunds rose after disappointing economic data from Europe and Asia and a partial shutdown of the U.S. government continued.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 9 basis points to 2.193 percent, the yield on the long-term 30-year bond also dipped 8-1/2 basis points to 2.700 percent and the yield on short-term 2-year down 5 basis points to 1.820 percent by 03:40GMT.

“2019 started the year with a distinctly risk-off tone, prompted by disappointing manufacturing PMI data, particularly from China whose Caixin PMI had fallen into contraction territory at 49.7 (lowest since May 2017), which reinforced market concerns about slowing global growth prospects,” noted OCBC Bank.

Risk-off sentiments had sent the U.S. Treasury bonds higher, with the 10-year bond yield down to 2.61 percent and 2-10-year yield curve flattening to below 15 basis points, but this did not deter the S&P 500 from eking out a 0.13 percent increase.

“President Trump’s meeting with Congressional leaders on the border wall funding that had contributed to the partial government shutdown for 12 days did not resolve the issue. Trump warned that the shutdown would last for “as long as it takes” and “it could be a long time or it could be quickly”. Separately, Trump also said in a Cabinet meeting that US-China trade talks “is coming along very well”. The deadlines for the 90-day trade truce is 2 March,” the report added.

Meanwhile, the S&P/ASX 200 index traded 0.16 percent higher at 5,583.5 by 03:50 GMT.