Australian bond yields gain tracking U.S. peer as optimism grows over U.S.-China trade talks

Australian government bond yields gained during Asian trading session Tuesday tracking a similar movement in the United States counterpart as optimism continued to grow on hopes of U.S.-China trade agreement, after President Donald Trump stated an extension of the March 1 deadline, in lieu of the ongoing progress and a better trade deal.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 2.092 percent, the yield on the long-term 30-year bond edged 1 basis point higher to 2.644 percent and the yield on short-term 2-year traded tad higher at 1.737 percent by 04:30GMT.

Global risk sentiments nudged higher amid news that UK PM May is considering delaying Brexit beyond March 29 and will chair a Cabinet discussion today. This followed news that US president Trump had also extended the 90-day trade truce deadline of March 1 with China, albeit he also cautioned that a deal “might not happen at all”.

Wall Street edged higher overnight and the 10-year UST bond yield closed higher at 2.67 percent (+2bps), while crude oil prices tumbled after Trump tweeted that they were too high and urged OPEC to “relax and take it easy”, OCBC Treasury Research reported in its Daily Treasury Outlook.

Lastly, ex-Fed Chair Janet Yellen criticised Trump as “I doubt that he would even be able to say that the Fed’s goals are maximum employment and price stability” and “comments like that show a lack of understanding of the impact of the Fed on the economy, and appropriate policy goals”. She also opined that “the economy is doing well”.

Meanwhile, the S&P/ASX 200 index traded 0.77 percent lower at 6,084.00 by 04:35 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 30.32 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex