Australian bond yields pare losses despite fall in U.S. peer amid global growth concerns

Australian government bond yields pared losses during Asian trading session Tuesday, as investors have largely shrugged-off the fall in the United States counterpart in the overnight session amid fears of global growth.

Asian shares rebounded today as investors started moving toward riskier assets and hopes arose that a major stimulus is on the way from the world’s major central banks.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 1.791 percent, the yield on the long-term 30-year bond also surged 1-1/2 basis points to 2.435 percent and the yield on short-term 2-year too traded 1-1/2 basis points higher at 1.472 percent by 03:20GMT.

Global risk appetite remained fragile, albeit Wall Street stabilised overnight; the UST bond yields continued to push lower, with the 10-year tenor briefly breaking below the 2.4 percent handle for the first time since December 2017 to hit 2.375 percent and below the average Fed Funds rate of 2.41 percent amid a sustained repricing of Fed’s interest rate outlook, OCBC Treasury reported.

"The Fed Funds futures market is now fully pricing in a possible rate cut by year-end, and we expect that the 10-year UST yield will make a run for the 2.3 percent handle amid month/quarter-end re-positioning flows," the report added.

Meanwhile, the S&P/ASX 200 index traded nearly flat at 6,117.50 by 03:25GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 102.77 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex