Australian 10-year bond yield hits record low on signals of nearing global recession

The Australian 10-year government bond yield hit a record low during Asian trading session Thursday, as signs of a global economic recession stampede investors’ risk appetite. This comes in despite a promising report of the country’s employment report for the month of July, released early today

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 5-1/2 basis points to 0.892 percent, the yield on the long-term 30-year bond plunged nearly 9-1/2 basis points to 1.457 percent while the yield on short-term 2-year traded flat at 0.735 percent by 05:00GMT.

With many bond markets now flashing amber for global growth and risk appetite, Wall Street took a plunge overnight as the 2-10 year UST yield curve briefly inverted to -1.9bps intraday before closing flat and was joined by the UK gilt yield curve also inverting for the first time since 2008 on increasing no-deal Brexit concerns, OCBC Treasury Research reported.

The Reserve Bank of Australia’s (RBA) Deputy Governor Guy Debelle also warned of the “risk of a self-fulfilling downturn”, albeit he cautioned that he is not sure “how much of a signal” the yield curve inversion is at the moment, the report added.

However, Australia’s surprisingly strong employment gain of 41.1k in June, largely due to a 34.5k rise in full-time employment, barely helped the debt market. The unemployment rate remained at 5.2 percent with the participation rate increasing to a fresh record high of 66.1 percent.

Meanwhile, the S&P/ASX 200 index remained nearly 1 percent lower at 6,355.50 by 05:05GMT.