Australian bonds flat in muted session amid U.S.-China trade tussle; October employment report eyed

The Australian government bonds remained flat during Asian session Wednesday amid a muted trading day that witnessed data of little economic significance. However, U.S.-China trade tussle continues to draw headlines in the financial market ahead of Australia’s employment report for the month of October, scheduled to be released on November 14 by 00:30GMT.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, remained steady at 1.276 percent, the yield on the long-term 30-year bond also flat at 1.881 percent and the yield on short-term 2-year hovered around 0.861 percent by 04:20GMT.

In a speech to the Economic Club of New York overnight, US President Donald Trump said “If we don’t make a deal, we’re going to substantially raise those tariffs”, even as he added that “a significant phase one deal could happen…soon”, OCBC Treasury Research reported.

On balance, in terms of helping the market decipher the probability of a trade deal with China, the speech was short on substance, even though Trump’s threat to raise the tariffs in the case of no-deal has added to the binary nature of impact of the ongoing negotiations. Any deal looks likely to be involving a rollback of existing tariffs, the report added.

On the flip side, if he carries through with his latest threat, tariffs may be raised if the talks break down, OCBC further noted in the report.

Meanwhile, the S&P/ASX 200 index edged tad nearly 1 percent down at 6,704.50 by 04:30GMT.