Australian bond yields climb as risk sentiment improves; 10-year yield up 2 bps

Australian government bond yields climbed across the curve during the Asian trading session Tuesday as risk sentiment improved and Wall Street shares trimmed previous losses.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 2 basis points to  2.289 percent, the yield on the long-term 30-year bond also jumped 2 basis points to 2.837 percent and the yield on short-term 2-year up 1 basis point to 1.877 percent by 03:50GMT.

“Yields on U.S. Treasuries initially fell in step with weaker risk appetite, but then recovered to be little changed overnight. Yields on 10-year notes sit at 2.70 percent, up from their lows earlier in the month but still well down from their recent peak above 3 percent in November,” noted St.George Bank in its report.

However, a surprising contraction in Chinese exports and imports reinforced concerns over a global economic slowdown, weighing on sentiment. Additionally, the US government shutdown extended to a record 24 days. These concerns outweighed Trump’s comments that a trade deal would be reached with China. In the UK, focus is on parliament’s vote on May’s Brexit deal due to be held tonight.

“The AUD remains trapped in range as weak Chinese data reminds the market of deteriorating global growth, but more dovish Fed speak eases concerns a touch. This arm-wrestle is set to continue in the near term,” noted economists at ANZ.

Meanwhile, the S&P/ASX 200 index traded 0.36 percent higher at 5,746.50 by 04:00GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 192.81 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex