Australian bond yields suffer amid U.S.-China trade worries; eyes on RBA’s May SoMP

Australian government bond yields plunged during Asian trading session Thursday amid tensions gruelling over trade tariffs between the United States and China. Investors shall now also be focussing on the Reserve Bank of Australia’s (RBA) Statement of Monetary Policy (SoMP) for the month of May, scheduled to be released on May 10 by 01:30GMT for further direction in the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, suffered 2 basis points to 1.724 percent, the yield on the long-term 30-year bond also fell 2 basis points to 2.343 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at 1.299 percent by 04:50GMT.

US President Donald Trump had tweeted optimism that China is coming to Washington to “make a deal”, whilst the Chinese Commerce Ministry also warned of retaliatory moves if additional tariffs are levied tomorrow, OCBC Treasury Research reported.

Further, Trump also issued an executive order to prohibit the purchase of Iranian iron, steel, aluminium and copper, after Iran declared it may begin enriching uranium again. The USD rose for a third day amid the ongoing US-China trade tensions, Wall Street continued to slide, while the UST bonds also fell across the curve amid a soft US$27 10-year refunding auction (with the lowest bid-cover ratio since 2009), the report added.

Meanwhile, the S&P/ASX 200 index edged 0.22 percent higher to trade at 6,266.5 by 04:55GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -2.86 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex