Australian bond yields slump tracking after-effects of lower-than-expected September employment change

Australian government bond yields slumped during Asian session Friday tracking the after-effects of the country’s lower-than-expected employment change for the month of September. However, a surprise fall in the unemployment rate limited any further losses in yields.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 5 basis points to 2.693 percent, the yield on the long-term 30-year bond also plunged 5 basis points to 3.165 percent and the yield on short-term 2-year traded 3-1/2 basis points lower at 2.038 percent by 04:00GMT.

Another strong labour market report for September saw the unemployment rate drop to a six-year low of 5.0 percent, well below the RBA’s forecast of 5-1/2 percent for year end. Employment rose a modest 5.6k in September, vs market expectations of after the 44.0k jump in August. The strength was concentrated in full-time jobs (+20.3k), while part-time jobs fell (‑14.7k).

"We expect that the RBA will lower its unemployment forecasts in the November Statement on Monetary Policy (SoMP), although the implications for its wages and inflation forecasts are less clear-cut," ANZ Research commented in its latest report.

Meanwhile, the S&P/ASX 200 index traded 0.72 percent higher at 5,915.50 by 04:20GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 2.73 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex