Australian bonds flat in muted trading ahead of RBA’s policy statement, June retail sales

The Australian bonds remained flat Wednesday as investors remained sidelined in any major trading activity ahead of the Reserve Bank of Australia’s (RBA) quarterly statement on Friday, which will provide updates on key economic indicators such as gross domestic product and inflation.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 2.72 percent, the yield on 15-year note flat at 3.02 percent and the yield on short-term 2-year traded nearly 1 basis point lower at 1.81 percent by 03:50 GMT.

The RBA kept benchmark cash rate at a record low of 1.5 percent, while warning that strength in the Australian dollar is expected to weigh on inflation and growth. Other than the comments on currency, the Australian central bank kept its verbiage largely unchanged from its prior statement. It pointed to a gradually improving economy, though rising household debt remained a concern.

Lastly, markets will now be focusing on the country’s retail sales for the month of June, scheduled to be released on August 4 by 01:30GMT, which will provide further direction in the debt market.

Meanwhile, the S&P/ASX 200 index traded 0.35 percent lower at 5,690.50 by 03:50 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -11.95 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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