Australian bond yields scarred as risk appetite worsens; weak employment report to boost safe-haven demand

Australian government bonds were scarred by a fall in investors’ risk appetite as concerns over a slowdown in global economic growth groped market sentiments, pushing participants towards safe-haven buying.

Further to that, Australia’s employment change for the month of November is expected to come in lower at 20.0K, from 32.8K in October, which will further give impetus to safe-haven buying.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 3-1/2 basis points to 2.384 percent, the yield on the long-term 30-year bond slumped 3-1/2 basis points to 2.880 percent and the yield on short-term 2-year down nearly 1-1/2 basis points to 1.944 percent by 03:25GMT.

Stocks have lost hugely over the last 48 hours, with the S&P 500 dipping as much as 2 percent towards end of trading session Monday, marking a new low for the index.

The big news for traders this week is the Federal Open Market Committee's (FOMC) monetary policy meeting, scheduled to be concluded by end of today, where the central bank will decide on the last phase of interest rates this year. The central bank is widely expected to adopt a rate hike, however expectations for further rate hikes in 2019 have dampened amid concerns of a potential slowdown in economic growth, CNBC reported.

Lastly, corporate sentiments will still remain subdued if the Fed delivers a rate hike as per expectations and signals further such hikes over the coming quarters as the proportion of debt will rise and lead to a burden on loan businesses.

Meanwhile, the S&P/ASX 200 index slipped 0.30 percent to 5,505.50 by 03:35GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -23.27 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex