Australian bonds fall tracking U.S. Treasuries following Fed Chair Powell’s comments

Australian government bonds remained tad higher during Asian session Wednesday as investors’ risk appetite showed downward signs, tracking a similar movement in the United States’ Treasuries.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 2.605 percent, the yield on the long-term 30-year bond also remained tad lower at 3.130 percent and the yield on short-term 2-year traded nearly steady at 2.014 percent by 05:00GMT.

A big risk rally overnight in Wall Street amid somewhat dovish comments from Fed chair Powell indicating "no preset policy path" and “current interest rates are “just below” a neutral range which suggested that a pause is due soon led the biggest US stock market rally in eight months. The USD also slipped whilst UST bond yields rallied and the yield curve steepened as the 2-year yield edged down to 2.81 percent.

Further, Australia’s capex fell slightly in Q3, although this was somewhat tempered by the upgrade to the Q2 result, from -2.5 percent q/q to -0.9 percent q/q. Spending on machinery and equipment (which flows directly into GDP) posted solid growth of 2.2 percent q/q, consistent with market expectations.

Meanwhile, the S&P/ASX 200 index traded 0.34 percent lower at 5,745.50 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 23.075 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex