Australian bonds flat post RBA monetary policy meeting minutes; April employment report in focus

The Australian government bonds remained flat Tuesday after the Reserve Bank of Australia (RBA) maintained a cautious tone in its May monetary policy meeting minutes, released earlier today. Also, investors now remained focused on the country’s employment report for the month of April, scheduled to be released on May 18 for detailed direction in the debt market.  

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 2.59 percent, the yield on 15-year note remained flat at 2.99 percent and the yield on short-term 2-year also remained steady at 1.66 percent by 05:10 GMT.

The minutes of the May board meeting presented a similar cautiously optimistic tone that has underpinned commentary in recent weeks. However, it was noteworthy that the RBA continues to highlight the labour market and housing as the key sources of concern.

There was extensive discussion on the labour market and in particular, the long-term shift towards part-time employment. The comments suggest some downplaying of the unemployment rate as a measure of spare capacity. In addition to the labour market, there remain concerns regarding the outlook for non-mining investment and the RBA noted a moderation in consumer spending.

Further, the other key concern for the RBA was the housing market. On this front, sentiment from the RBA was broadly unchanged from the previous month. However, the RBA noted that “risks associated with household balance sheets had been rising” given that housing credit growth was outpacing growth in household incomes.

Meanwhile, the ASX 200 index traded 0.18 percent up at 5,846.50 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish at 81.78 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex