Australian bonds continue shrinkage on hopes of U.S.-China trade deal; November retail sales eyed

Australian government bonds continued to shrink during Asian session Wednesday, tracking a similar movement in the U.S. Treasuries on hopes of a faster progress in the U.S.-China trade talks, on way to reach an agreement soon.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.335 percent, the yield on the long-term 30-year bond also remained tad higher at 2.844 percent and the yield on short-term 2-year too traded 1/2 basis point higher at 1.908 percent by 04:00GMT.

Risk sentiment further improved last night as the 10 year US Treasury yields climbed to 2.73 percent and stocks rallied on Wall Street. This came in the backdrop for some positive news regarding the US China trade talks as President Trump tweeted that things are “going very well” after the two countries wrapped up meetings, OCBC Treasury Research reported in its daily outlook.

Regardless, some reports suggest that the two sides are still weren’t closing in on a deal.  However, uncertainty still prevails regarding the US government shutdown as both sides still can’t reach agreement on funding for the border wall though it appears unlikely at this point that Trump would use his address scheduled on Tuesday night Washington time to invoke emergency powers, the report added.

Meanwhile, the S&P/ASX 200 index traded 0.67 percent higher at 5,718.50 by 03:55GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 121.89 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex